How Do I Interpret a Bitcoin Chart
When it comes to trading the btcusd market the cryptocurrency chart is the basic tool used by all traders. The cryptocurrency chart will show info about a bitcoin instrument - the cryptocurrency chart will illustrate the general direction of bitcoin prices, the chart also will show the ruling price of bitcoin and the chart also will explain the historical movement of chart bitcoin prices.
Traders will use these charts to determine where to open trades. From the chart the trader will analyze btcusd market movements using technical indicators so as to determine the direction of the market and determine the trade to open.
Traders must therefore learn how to use charts before they can start transacting in the online bitcoin market.
The following are the various things that a trader will need to know about bitcoin charts.
Types of Charts
There are three types of bitcoin charts
Line BTCUSD Chart - this charting method draws a continuous line that connects the closing bitcoin prices. For example if a trader is using the 5 minutes chart then this line cryptocurrency chart will draw a continuous line that connects closing bitcoin price of the btcusd market after every 5 minutes.
Bar Bitcoin Chart - This chart use bars to illustrate bitcoin price movements, and plots OHCL - Opening bitcoin price, High, Low, & Closing bitcoin price for that period, for example if the period used is 5 minutes, the bar will represent the bitcoin price data & the OHCL points for the 5 minutes.
Candle Bitcoin Charts - The are the most popular chart types because they're the most visually appealing & they represent the bitcoin price movements in an easily identifiable way which clearly show when a market moves up or when it moves down using different colors to differentiate the direction. These candlestick cryptocurrency chart look like a candle & they have a body that resembles the wax part of a candle & an upper & a lower poking line that resembles the wick of a candlestick.
Bitcoin Chart Periods - Chart Time Frames
A chart will draw charts based on different time periods - these are 1 minute, 5 minute, 15 minute, 1 hour, 4 hour, 1 day, 1week & 1 month. The period used to draw chart data also is known as a chart time frame, for example the 5 min chart period is commonly referred to as the 5 min cryptocurrency chart by trader. This 5 min time frame will represent data for the five minutes of trading, after those five minutes another set of data will be used to draw another chart representation. For example if a trader is using candles chart, the data of one candle will draw data of that five minutes, after those five minute another candle will be plotted using bitcoin price data of the next five minutes - when these candle-sticks are combined they then make a graph representation that shows the general direction of bitcoin prices often known as the trend. Traders can then use this information to make trade decisions.
Because the most commonly used charts are candles charts we shall discuss how to read charts specifically candlestick bitcoin charts.
How to Use Candlestick Bitcoin Charts
The candlestick charts uses candlestick that have different colors to represent different bitcoin price moves, blue candle-sticks show bitcoin prices closed higher than they opened, red candles show bitcoin prices closed lower than they opened. This color representation is then used by cryptocurrency traders to determine when bitcoin price has headed up or down.
The candlesticks also show OHCL:
O - Opening Bitcoin Price
H - Highest Bitcoin Crypto Currency Price
C - Closing BTCUSD Crypto Currency Price
L - Lowest BTCUSD Crypto Currency Price
These bitcoin price points are represented using a formation which looks like a candle-stick, the distance between opening bitcoin price & closing bitcoin price is represented by what's referred to as body, this part resembles the wax part of a candle. High bitcoin price is represented by a poking line protruding up-wards, this line resembles the wick of a candle, the low bitcoin price is represented by a poking line protruding downwards & it also looks like a candle wick facing down.
Candlesticks
One can also add a bitcoin indicator on the cryptocurrency chart so that they can analyze the chart market using these indicators. Bitcoin traders will need to place indicators on the bitcoin trading so that they can get additional information about a bitcoin trend & therefore be in a better position to make a more informed decision. These technical indicators can be used to predict the likely market direction that the btcusd market is likely to keep moving in whether up or down.
One can use indicators such as the moving averages and Bollinger to determine the trend. Traders also can use other indicators such as the RSI and stochastic oscillators to determine when to open trades.
Bitcoin Trend lines are also used to determine the direction of the candlestick charts trends and these lines can drawn on the charts to illustrate this direction. A crypto upward bitcoin trend will be pictured by a bitcoin trend line is moving up while a bitcoin trend that is moving down will b e shown a bitcoin trendline which is heading downwards.
To learn how to draw a bitcoin trend line and how to trade using technical analysis a trader can learn about the bitcoin trend line lesson under the learn bitcoin lessons section of this web site, for indicators a trader can learn about indicators & their technical analysis on the cryptocurrency indicators section of this website.
