How to Read Crypto Charts [2021 Beginners Guide]
How to Read Crypto Charts [2021 Beginners Guide]

How to Read Crypto Charts [2021 Beginners Guide]

Cryptocurrency is becoming as exchangeable as the traditional dollar. Understanding how to properly read crypto charts can be a difficult task to master, but it will help you monitor the costs of your favorite coins as you’re deciding when you should buy or sell.

After you develop this skill, you can also begin to understand how the market is trending in your favor. The information below contains everything you need to start making money with cryptocurrency!

Let’s get started.

What Is a Crypto Chart?

How to Read Crypto Charts [2021 Beginners Guide]
What is crypto chart?

Simply put, a crypto chart shows you an accurate snapshot of the past and current coin prices that occur within a specific time frame. This could be as short as seconds to minutes or as long as days to months. Fortunately, you get to decide what time frame you look at.

When you’re actually looking through the fluctuating action of the prices, you’ll see these values displayed as Japanese candlesticks, lines, bar charts, graphs, etc. By analyzing a crypto chart in the trading platform of your choice, you will see how a specific trading pair is doing within the selected time frame. 

Japanese Candlestick Chart

Japanese Candlestick Chart
How to read Japanese Candlestick Chart

Many analysts use this type of chart because it can provide more information than other traditional analysis tools.

These charts show the open, highest, lowest, and closing prices for the exact time frame you choose to look at.
Also, the dates and price increments can be located on the side and bottom portions of the chart.

Each candlestick chart provides a specific color, length, shape, and size for the data in question. Analysts and investors can use these colors to determine what the future market trends are expected to be.

Blue: This represents that a positive price change is projected.
Red: This represents that a negative price change is projected.

Now, below is a step-by-step guide on how to utilize these charts for your investment strategies. 

Step 1: Select the Time Frame

The candlestick chart allows you to select the time frame you’d like to look at. Once selected, you will be able to see all of the transactions that occurred within that time.

This time frame is completely customizable so you can pick any time frame you want. You can also choose one of the default options which includes 5 minutes, 15 minutes, 1 hour, 4 hours, every day, every week, or every month.

Step 2: Evaluate the Volume

The standard candlestick charts will display the volume of how much trading activity happened within the time frame you selected. If the volume bar is longer, this means there was more buying and selling pressure at that exact time. The colors displayed on these charts also have significant meaning associated with this market pressure.

Green Volume Bar: Interest in the coin and buying pressure have increased.
Red Volume Bar: Interest in the coin and selling pressure have decreased.

Step 3: Distinguish the Two Types of Candlesticks

The two types of candlesticks are the Bullish and Bearish. They represent different trends within the coin buying and selling pressure.

Bullish Candlestick: The price of the coin increased during the time frame you selected. The bottom of the thick portion is the opening price and the top is the closing price.

How to Understand Crypto Depth Charts

How to understand Crypto Depth Charts
How to understand Crypto Depth Charts

Learning how to read depth chart crypto will show you both the supply and demand of any asset you’re interested in. At varied prices, these charts illustrate the buy and sell orders of any asset so you know what amount of the asset is available for you to sell at certain price points.

The left side of the chart (green) shows bid and buy orders on the x-axis. On the other hand, the right side (red) shows ask and sell orders on the x-axis as well.

From reading this article, you have gained all of the knowledge you need to start investing in the challenging world of cryptocurrency. Knowing how to read the candlestick crypto charts will allow you to properly evaluate the market so you can buy and sell at the most optimal times. Continue to strengthen your knowledge on cryptocurrency by reading other related articles on our website!