Getting confused while reading crypto charts? Here is a complete understanding on it!

To be a pro crypto trader, it is very essential that you are completely aware about and read the crypto charts on the cryptocurrency exchanges. The chart is basically a 2D data set projecting time and price of cryptocurrencies in graph pattern. Reading the Crypto trading charts can help in analysing real-time technical data and the trends associated with the prediction of future price movements of the digital assets.

Crypto chart – What is it, and why is it an essential component for cryptocurrency trades?

Developed through the process of Trading software development, a crypto chart is a crucial tool to know about for every trader (beginner or novice). The charts are the best tools to provide you with an insight into whether the digital asset has been stable or volatile in the past, and how return can be expected if the asset is traded on the exchange. This will further help in deciding on whether to invest in any specific crypto or stay away from it, till it stabilizes. Cryptocurrency charts best indicate the trading pair, time period, and the trade platform as well.

Crypto charts are the best tools available that can help in forecasting future trends and if there will be changes in market happenings. This can help a trader make smarter investment decisions along their trade journey. The charts provide a snapshot of historical and real-time crypto price movements happening over a specified time period; ranging from seconds to minutes, days to weeks, and more to be counted. However, at first, the charts might appear to be an intricate piece of tool, but once you understand the basic understanding, everything becomes easy.

How to read a crypto chart?

As mentioned earlier, crypto charts are graphical representations of historical price, volumes, and time intervals. According to companies specializing in Crypto trading software, data is provided in the charts in form of patterns based on the price changes of the digital assets. However, to understand how to read a chart it is very important to understand some patterns like –

•    Japanese candlestick pattern: A Japanese candlestick pattern if the most commonly used charts by the traders. The patterns in the chart are represented by candlesticks, and in the chart a candlestick (in red colour) is used to represent the closing price which is lower compared to the starting price for a specific time frame. If a candle appears green in colour, then the chart shows that the closing price was higher than the starting price. Traders can follow the chart by observing the colour, shape, and of the candlestick to take position or make changes in trade decisions as well.

•    Bearish and bullish patterns: Charts representing these patterns show two types of patterns; Bullish Reversal Patterns and Bearish Reversal Patterns. Let’s say, for instance, a hammer candle pattern in the chart represents a bullish reversal pattern telling us that a stock is nosediving and going for a downtrend, and the body of the candle representing the head of the hammer says; the crypto sellers are driving prices low. The bearish reversal patterns in the chart represent the upward trend and can only be confirmed by observing it closely for a few days, and the reversal is also validated by a rise in trading volume as well.

•    Shooting star pattern: In this chart the candles appear in a shooting star pattern that generally happens at the height of a rebound before being reversed down. The patterns in the chart appears as a candlestick with a long upper wick and a small wick, and there is also a small candle body with little or no bottom wick at all. Candles in this chart depicts the powerful drive by the crypto buyers that is met with a strong opposition.

According to the crypto experts of the Best crypto exchange development company, being able to read the crypto charts is a practical skill that every trader needs to acquire in today’s challenging cryptocurrency marketplace. Crypto charts are considered as the best tool helping understand the ups and downs in the trades, and is a complementary tool as well.