Cryptocurrency is increasing its range every year despite the ups and downs experienced by traders and investors. The steady success of the crypto market has proven that it is to stay for the long haul. Cryptocurrency charts are handy tools for tracking the price value of a specific digital coin. For this, you need to develop the right skills to read cryptocurrency charts to know the market trends. Cryptocurrency candlestick charts can provide you with a more purposeful view of the coin price against something that may be slightly more subjective, such as your insight.
Many crypto traders experience a problem when timing the marketplace. Using cryptocurrency charts can help you make accurate entry and exit points. For example, exiting too early or too late can make you leave your funds on the table. Cryptocurrency charts with technical analysis can certainly let you balance that out. This post will encompass several basics on how you can understand the cryptocurrency charts with crypto analysis tools to succeed in this field.
Understanding Candlestick Cryptocurrency Charts
Several ways can help you look at the crypto charts, though most investors find candlestick charts the easiest to meet the purpose. You can use several primary elements of the candlestick chart to navigate through the pricing graph.
Choose the Time Frame
Candlesticks crypto charts let you show all the transactions that occurred in that particular time frame. If the time frame for your preferred digital currency, for example, is five minutes, candlestick charts will represent the data for those five minutes. You can adjust the time frame to make it more customized. Candlestick crypto charts also allow you to choose from default time frames, ranging from 5-minutes to weekly and monthly.
Look at the Volume Bar
The standard crypto chart displays the volume of the trading activity that took place during your chosen time frame. A longer volume bar usually indicates an increased buying or selling pressure. A green volume bar indicates increased demand and buying pressure for a particular coin, whereas a red volume bar shows a decreased demand and selling pressure for the currency.
Distinguish Bearish and Bullish Candlesticks
Bearish and Bullish candlesticks are two different types of candlestick charts. Green candles represent bullish candlesticks. They indicate that the price value of a specific coin has increased during the chosen period. The thick section of the bullish candlesticks highlights the opening price, whereas the upper side of the body indicates the closing price. The candlesticks wicks show the highest and lowest values of the coin throughout the chosen time frame.
Cryptocurrency Analysis Tools
There are various shapes and forms available for the candlesticks. With candlestick price formations, you can predict potential market trends and decide on your trading transactions. Many candlestick combinations like chart patterns are handy in predicting what is likely to happen next. Make sure to have the right crypto tools to discern the data from the cryptocurrency candlestick charts.
Many technical crypto tools are there to help both beginners and experienced cryptocurrency traders. However, using a variety of high-tech tools in combination may work more in favor. These trading tools aim to help you avoid losing your hard-earned money and make wise trading decisions. These include:
Money Flow Indicator
Chaikin Money Flow indicator is a practical crypto analysis tool that helps understand the volume of a specific digital currency through institutional accumulation distribution. It indicates when institutional traders buy and sell their cryptocurrencies. The Chaikin volume of the indicator below the zero line shows sell-offs, whereas the indicator above the zero line highlights a rally.
It is free charting software that tends to serve as the best crypto analysis tool. It comes with several capabilities and features to make your trading smooth and effective. TradingView offers an easy setup and use. It comprises many handy resources and instruments to help you with your cryptocurrency trading.
Crypto Fear and Greed Index
This cryptocurrency analysis tool uses a range of information. It plots all the gathered data on a chart for you. The sentiment on the graph below 20 highlights the extreme fear as the decreased cryptocurrency price signals a bullish reversal. On the other hand, the market sentiment reading higher than 80 indicates extreme greed. Generally, the fear-and-greed index serves as a contrarian indicator. Market sentiments drive the marketplace. An extreme reading on the market sentiment highlights that you should now seek a reversal.