1. Candlestick Charts
These are the most commonly used types of charts. Each candle represents a time period (e.g., 1 hour or 1 day) and shows:
• Opening Price (Open)
• Closing Price (Close)
• Highest Price (High)
• Lowest Price (Low)
If the candle is green (or white), it means the price increased during the period. If it is red, it means it decreased.
2. Support & Resistance
• Support: A price level where the market tends to bounce back up (indicates strong demand).
• Resistance: A level where the market tends to bounce down (indicates strong supply).
Understanding these levels helps in determining entry and exit areas.
3. Trend
The overall direction of price movement:
• Bullish Trend: Higher highs and higher lows
• Bearish Trend: Lower highs and lower lows
• Sideways Trend: The price fluctuates in a narrow range
A good trader does not trade against the trend.
4. Technical Indicators
Technical tools added to the chart to help in decision-making:
• RSI (Relative Strength Index): Measures whether the currency is in a state of 'overbought' or 'oversold'
• MACD: Identifies entry and exit points based on the intersections between moving averages
• Other indicators like Bollinger Bands and Moving Averages can improve your decisions.
5. Chart Patterns
Patterns that recur on the charts and indicate a potential trend:
• Head & Shoulders: A reversal pattern indicating a change in trend
• Triangles: Indicate continuation or reversal
• Rectangles, Flags, Pennants: Used to identify breakout points
Summary:
Understanding crypto charts does not require you to be an expert immediately, but it is a skill that develops through practice and observation. Every element helps you read the market more clearly and make informed decisions instead of random ones.
