Reading price charts is an essential skill in crypto trading,
whether it's day trading, swing trading, scalp trading,
or stamp trading for your collection,
if you're into that kind of thing.
You had a stamp collection?
Crypto is known as a high volatility asset,
which makes its price fluctuate unpredictably in a wide range,
which is the reason you can make money on it in the first place.
So, it's crucial to know how to read crypto charts properly,
especially for beginner traders who wish to start making fortunes on this gold mine.
So, today, we're going to talk about crypto charts and explain to you what all those lines, numbers and odd shapes are.
Let's get it.
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Alright, guys.
No more waiting.
Here we go on the adventure to discover the secrecy of crypto charts.
So hop on the bus.
As you guys may know, if you follow the series,
reading charts is a basic technique of technical analysis,
in which traders will rely on historic statistics and metrics to analyze market movements.
Looking at all these confusing lines and shapes seems daunting at first,
but don't worry,
it's not that difficult to digest if you know where to start,
and I'm here to show you every tip that works.
Crypto charts can be displayed with various time frames.
Depending on your intention,
you can choose to sort out a graph for 15 minutes,
one hour,
24 hours,
the whole week,
or all the existence of a project.
It also reflects your trading style.
Day traders often concentrate on short periods
so they can extract the best shots within the same day.
Swing traders may want to look at a longer duration,
for example, a couple of days or a week,
to detect price moves.
While long-term investors may look at periods of months or years.
There are different ways to visualize crypto charts,
so you should get familiar with them.
Price can be displayed in a simple line,
which merely describes price changes during the selected time.
Line charts are divided into two types---
logarithmic scale and linear
or aka arrhythmic scale.
The linear scale represents price changes in absolute values,
while the log scale draws the reversal in percentages.
Sometimes, these two lines look a lot alike.
The only difference is the vertical scale.
Price in linear charts is chopped off equally,
while in log charts, the price scale is divided by percentage changes.
You should be able to tell which one you're looking at.
Log chart’s often set the default view,
as it better reflects the trend and amplitude of the total price.
You can also look at below these charts for the volume indicator,
which presents how much crypto has been traded in that period.
Combined with a price chart, volume indicators can help build the most vivid picture over the market.
If you notice both the price and the volume are increasing,
it may simply imply people are rushing to buy,
and a rally is possibly continuing.
On the other hand, if the price goes up but cannot accelerate the purchasing power,
it means traders are still skeptical of a bubble.
Another chart that you might have heard quite often is candlestick pattern.
Sound familiar?
We’ve talked about it at least a dozen times in these previous videos.
Now, let's do a recap in case you weren't paying attention.
Candlestick charts provide much more informative data,
not only price moves and volumes but also include the opening and closing price,
the highest and lowest level in one session.
It's so popular to see candlestick dashboards with subsequent columns full in green and red.
Let me remind you, green illustrates an uptrend, while red is for a downtrend.
There are different types of candlesticks,
but in this video, I'm going to re-emphasize the most common patterns you'll see while trading.
The bull market has two typical candlesticks,
which are the hammer and the reverse hammer.
They are specified by green color,
whereas in the hammer, the thick column lies on the top with the tail below,
resembling an uptrend falling after a downtrend.
The reverse hammer has the thick column hung at the bottom,
indicating a more stable uptrend throughout the session.
Conversely, there are hanging mans and shooting star candlestick patterns,
which symbol the bearish market.
The hanging man with a red thick column on the top of the line, giving a signal about a recession after a bull,
while the shooting star has the red at the bottom, warning about a mainstream downtrend movement.
You can look at a market depth chart to get a picture of the supply and demand of the current market.
In this chart, the green area indicates the number of coins and buy orders at that moment,
while the red area shows the sell amount at that current price.
The connecting point between the two sides is the current market price.
You can move your mouse anywhere to take a closer look at the specified price and sold or bought amount.
You can not merely view the line chart or candlestick chart in a single day,
so I'm going to present you some extra techniques and indicators to help you capture the trend over a set period.
Two basic indicators you might hear often are support and resistance.
The support line is used to point out the bottom of a downtrend,
in which the plunge is expected to bounce back and push the price back up.
On the other hand, the resistance line refers to a level on the top,
where an uptrend may defer.
Technically, the support line indicates the lowest price so traders can buy the dip,
and resistance is the highest price in a bull market for doing that.
After that, an inverted trend will take place, making the market balanced again.
Next, we will have moving averages.
While the simple moving averages are pretty appropriate for showing the trending lines by connecting different averages and market price,
I'll give you an advanced variant of that,
which is called moving averages convergence/divergence (MACD).
The MACD mainline is generated from the subtraction of two, of the 12-day and 26-day Exponential Moving Averages, or EMAs.
Plus there is a signal line from a 9-day EMA.
Each MACD creates a histogram based on the difference between the two EMAS.
I have to admit, it sounds quite complex,
but hang on.
You just need to understand that a positive MACD line above the zero line refers to an uptrend.
Otherwise, it's in a downside.
And when the MACD line is above the signal line, it often indicates the entry point.
The opposite situation might suggest the time to exit.
Guys, are you still with me?
Where did everybody go? The lecture is not over yet.
Oh, you're still here.
Thank you.
You've already completed about 99% of this journey.
Don't give up,
as you have with all the other objectives you've ever set for yourself.
Just finish the last 10%.
This next indicator also uses the simple moving average,
and it's called Bollinger Bands.
Just as the name suggests,
the Bollinger Bands add an upper and lower band factoring by the standard deviations around the moving average.
If the moving average line moves closer to the upper band,
it typifies an overbought market state.
The other situation indicates an oversold state.
The wider the bands, the more volatile the coins and the wider their prices swing.
Now, for the last indicator, I want to mention the relative strength index or RSI.
This specifies market momentum via overbought and oversold states,
which are illustrated by two lines across the chart.
Usually assigned from default values, 70% were overbought and 30% oversold.
In theory, when the RSI line crosses the upper or lower line,
it blows a whistle that the market buying or selling orders are too much.
Then the trend is probably going to rebound and push the price back to the balanced level.
Hence, when you see the market is in an overbought state,
the RSI goes below 70,
it is the signal to sell.
On the opposite, when the market is oversold,
the RSI exceeds 30,
it's time to buy.
As I promised, I’ve made this video truly informative.
Don't grumble or resent me, as I know this was a lot of information.
Take your time and digest all the tips.
You'll be amazed at just how helpful they are
when you truly begin to make the best out of these charts.
But now it’s your turn.
Which indicators do you find most efficient for analyzing crypto prices?
What other types of charts do you find useful when trading?
Let me know what you think down below in the comment section.
I hope you enjoyed this video.
If you did, please make sure to smash the Like button and hit Subscribe to become a member of the BitSquad.
Thank you so much for watching.
Have a blessed day.
BitBoy out.