A little knowledge can cause dangerous loss! Before getting yourself into the cryptocurrency ecosystem make sure you get the whole picture clear about the crypto platforms. Otherwise, don’t risk your bucks in the cryptocurrency marketplace. Let me ask you a question: Are you aware of the cryptocurrency charts and how to read them? If not, then make sure you continue reading this article. We will discuss every aspect of these cryptocurrency curves together.
STICK TO THE CRYPTO CANDLESTICK CHARTS
Crypto candlestick charts bring to you a broader objective view on the cryptocurrency price compared to a more subjective approach such as guessing or making use of your intuition.
The most common problem with the traders is timing the market. You need to understand that to achieve precise entry and exit points you “sine qua non” (require) cryptocurrency charts. There are absolute chances that you end up picking the wrong point while investing in Bitcoin. Later, you will be at the onset of losing money from left to right.
There are possibilities if you egress untimely or too late then you might end up missing out on great profits. However, wielding crypto charts are the best tools you can avail along with the technical analysis for investing in cryptocurrencies without facing any loss.
HOW TECHNICALITY LEADS ITS WAY IN READING CRYPTO CANDLESTICK CHARTS?
First things first, what is Dow Theory?
Dow Theory tells about the trends in the market and how they usually act. It offers signals that are used to spot the foremost market trend. After that, the principal market trend is used to put together trading decisions.
You might be wondering how Dow Theory is related to the crypto market? Well, as claimed by Dow Theory, the market contemplates every aspect during its pricing. The present-day asset prices are a replica of all prevailing, preceding, and forthcoming details of the stock. That means rather than focusing on every single variable that budges the coin price, you must center your attention on the price of the coin.
You can figure out the market behavior once you can acknowledge the market patterns.
PREDICT CRYPTOCURRENCY ODDS-ON FUTURE PRICE VALUE
Technical analysis is a modus operandi that prognosticates cryptocurrency’s probable price movement. Read the market like a pro with the technical analysis approach.
Examine the crypto charts to carry out the technical analysis. Let’s take a look at the following facets of crypto charts.
- Choose your time frame!
If you observe the crypto charts, you will notice that every time frame has unique information related to crypto charts. Charts are minute-based, hourly-based, or even based on days.
If you take fancy to a single day, then go for short timeframe charts. If you abide by a long-term commitment, then you would make your way for long timeframe charts.
- Try the market cap on cryptocurrency!
A coin’s market cap decides the stability of crypto. Calculate the aggregate currency and multiply the resulting number by each coin’s price. The market cap’s stability is defined by its consistency in value.
- Don’t underestimate the Relative Strength Index!
The Relative Strength Index (RSI) computes the strength and pace of a cryptocurrency’s market price. It is a performance comparison of the ongoing price to the past performance of the cryptocurrency.
The RSI ranges from 0 to 100. In general, when a coin’s RSI reaches, or traverse 70, it is contemplated to be overemphasized, or overbought. Contrarily, if RSI closes in on 30, then crypto is underrated.
- Is it supporting!
The assets prefer to stop falling when it reaches the support level. Most often, the traders buy at the support level which is considered the predetermined level as the asset is inclined to countermand its trend.
Opposable to the support level is the resistance level where the asset ceases to rise in value. Frequently, traders vend the assets when it reaches the resistance level.
The support and resistance levels are dead set on the participants in the market. Traders comprise of typically three categories:
- One who aims to go long and wait for the hike in prices.
- One who lines up for going short and waits for prices to plunge.
- And the last ones are lost wanderers who don’t have any idea where to go.
IN A NUTSHELL
Reading cryptocurrency charts is no rocket science. With suitable technical analysis along with the Dow theory, choosing an accurate time frame, making sure the market cap fits on cryptocurrency hat, know the support and resistance level, you will be good to go.