A lot of people ask me how I read an asset in crypto. There’s no secret, it’s basic, but it works. Of course, the reading shouldn't be taken 100% seriously, but rather be an additional tool when we make decisions.
First, I look at the trend. If the price is making increasingly higher peaks and troughs, it's an uptrend. If they are getting lower and lower, it's a downtrend.
Next, I see where the price usually holds or gets stuck. This is support and resistance. It’s easy to see on the chart, these are the points where the price hits and bounces back multiple times.
Volume is also key. If the price rises or falls without volume, I don’t take it too seriously. A strong movement needs volume to accompany it.
I also use the RSI. If it's very stretched upwards, it usually indicates a correction. If it’s very low, it might be getting interesting...
Of course, these are just indicators, they don’t serve as absolute truth... But trends help when making our buying and selling choices.
And lastly, I look at sentiment. If everyone thinks they’re going to get rich, it’s usually time to be cautious. If everyone is scared, it might be an opportunity.
