How to read crypto charts correctly? Trading 101 | news

Cryptocurrency trading is a popular way to make money in the crypto markets. However, trading cryptocurrencies successfully requires some technical knowledge. This includes understanding cryptocurrency charts.

Cryptocurrency prices are very volatile and the trading environment is much more dynamic than forex or stocks. Therefore, it is important to be familiar with the various technical indicators and chart patterns to make better decisions. This can increase the potential profitability.

The technical analysis

One of the most common methods of chart analysis is technical analysis. It mainly deals with the historical price and volume data and tries to identify patterns and trends that may repeat in the future. This makes it possible to predict possible price movements and base trading decisions on them.

In order to perform real-time technical crypto analysis, there are various trading platforms such as LBank.

Analyzing cryptocurrency charts is an important part of decision making for crypto traders. Known as technical analysis, this approach allows traders to better understand market sentiment and identify key trends in the market.
The goal of technical analysis is to use historical price and volume data to identify patterns and trends that may repeat themselves in the future. This allows traders to predict possible price movements and base their trading decisions on them.

Trading volume – one of the most important indicators

Trading volume is an important indicator for identifying trends in cryptocurrencies. By analyzing trading volume, one can see whether a trend is accompanied by high or low demand. A high trading volume indicates that there is a significant trend, while a low trading volume indicates a weak trend.

When looking at cryptocurrency charts, it is important to keep in mind that supply and demand on each trading venue determines the price action. Therefore, it makes sense to check trading volume when observing a coin’s price action. When a coin falls, it is wise to check the volume that accompanied the fall.

A sustained and positive development trend in the market is usually accompanied by a strong trading volume during price increases and a low trading volume during declines. It is also important to note that volume should increase over time. When the volume falls while it continues to rise, it is an indicator that the uptrend may be coming to an end. Conversely, the same applies to a downward trend.

It is important to note that trading volume is only one indicator among many and should not be used as the sole basis for making decisions. It should always be seen in conjunction with other analysis such as technical indicators and fundamentals to get a clearer picture of the market situation.

In order to perform real-time technical crypto analysis, there are various trading platforms such as LBank.

Moving averages simply explained

The moving averages are a commonly used technical indicator in the cryptocurrency industry. They serve to filter the noise of short-term price fluctuations and provide a trend-following indicator. There are two different types of DG used on crypto charts: SMA and EMA.

A simple moving average, also known as a simple moving average (SMA), calculates the arithmetic average of a set number of prices over a set period of time. An exponential moving average, also known as an exponential moving average (EMA), on the other hand, uses a weighted average that puts more weight on the past few days, making it more responsive to new information.

Moving averages are often used together to give a better indication of when a trend will reverse. The number of days used to calculate the moving average can vary. Two of the most common moving averages used on crypto charts are the 50-day and 200-day moving averages. These are used to identify long-term trend patterns and areas of support and resistance. Integrating these two indicators into a bitcoin price chart makes it possible to spot prices at the upper or lower limit of their possible swings and to point out a possible trend reversal.

Golden and Death Crosses – Important confirmations

The Golden Cross and Death Cross are important indicators of future price movements and trend changes in the stock market. These indicators are determined by crossing two moving average lines, the 50-day and 200-day lines.

A golden cross occurs when the 50-day moving average crosses above the 200-day moving average, signaling a bullish trend reversal pattern. A death cross occurs when the 50-day moving average falls below the 200-day moving average and signals a bearish trend reversal pattern.

An example of this is the Bitcoin price chart, which shows two instances over the past year where these patterns have been observed and prices have gone up or down in the following months. It should be noted that these patterns often appear after the bottom or top of the trend itself, as they serve more as confirmation patterns. Moving averages can also often be seen as zones of support and resistance and give an indication of whether there is momentum in a particular direction when crossed by price.

In order to perform real-time technical crypto analysis, there are various trading platforms such as LBank.

Understand support and resistance levels

Support and resistance levels are important concepts when analyzing cryptocurrency charts and are a commonly used indicator. Markets fluctuate over time, and areas where prices experience a decline are called resistance, while a rise from a downtrend is called support.
If prices keep coming back to the same level without crossing it, then the resistance will become stronger at that point. Conversely, if prices continue to fall to the same level but not below, the support becomes stronger.
When prices break through these zones, it is called a breakout, and the next level of support or resistance is then sought in the opposite direction. Understanding how to identify these areas of support and resistance will help make an informed trading decision based on market trends.

The Fibonacci Zones

Fibonacci retracement levels are a useful tool for crypto traders. They are based on Italian mathematician Leonardo Fibonacci’s discovery of a simple series of numbers that describe relationships that exist naturally in the universe. These ratios (0.236, 0.382, 0.500, 0.618, 0.764) can be applied to crypto charts to identify potential retracement levels, which can then be used as estimates of support and resistance levels.
The theory behind Fibonacci retracement levels states that after a strong price movement in one direction, the price will travel part of the way before returning to the original direction.

In order to perform real-time technical crypto analysis, there are various trading platforms such as LBank.

Final words about reading the cryptographics

In conclusion, reading cryptographs is an important part of cryptocurrency trading. It is important to be familiar with the various technical indicators and chart patterns to make better decisions. One of the most common methods of chart analysis is technical analysis, which primarily deals with historical price and volume data and identifies patterns and trends that may repeat themselves in the future. However, it is important to note that technical analysis is only part of the decision-making process and should be considered in conjunction with fundamental and other analyzes to get a clearer picture of the market situation.

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