How to Read a Bitcoin Chart
When it comes to trading the btcusd trading market the cryptocurrency chart is the basic trading tool used by all traders. The cryptocurrency chart will show information about a bitcoin trading instrument - the cryptocurrency chart will show the general direction of bitcoin prices, the chart will also show the current price of bitcoin and the chart will also explain the historical movement of chart bitcoin prices.
Traders will use these charts to determine where to place trades. From the chart the trader will analyze the btcusd trading 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 crypto 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 trading market after every 5 minutes.
Bar Bitcoin Chart - This chart use bars to represent 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 and the OHCL points for the 5 minutes.
Candle Stick Bitcoin Charts - The are the most popular chart types as they are the most visually appealing and 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 and they have a body that resembles the wax part of a candle and an upper and a lower poking line that resembles the wick of a candle.
Bitcoin Chart Periods - Chart Time-frames
A cryptocurrency chart will draw charts based on different time periods - these are 1 minute, 5 minute, 15 minute, 1 hour, 4 hour, 1 day, 1week and 1 month. The period used to draw chart data is also referred to as a crypto 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 chart 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 crypto chart, the data of one candle will draw data of that five minutes, after those five minute another candle will be drawn using bitcoin price data of the next five minutes - when these candlesticks are combined they then make a graph representation that shows the general direction of bitcoin prices commonly known as the trend. Traders can then use this information to make trading decisions.
Because the most commonly used charts are candlesticks crypto charts we shall discuss how to read crypto charts specifically candlestick bitcoin charts.
How to Use Candlestick Bitcoin Charts
The candlestick crypto charts uses candlestick that have different colors to represent different bitcoin price moves, blue candlesticks 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 moved up or down.
The candle sticks also show OHCL:
O - Opening Bitcoin Price
H - Highest Bitcoin Price
C - Closing Bitcoin Price
L - Lowest Bitcoin Price
These bitcoin price points are represented using a formation which looks like a candlestick, the distance between the 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 upwards, this line resembles the wick of a candlestick, the low bitcoin price is represented by a poking line protruding downwards & it also looks like a candle wick facing down.
Candlesticks
A trader 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 trading decision. These technical indicators can be used to predict the likely market direction that the btcusd trading market is likely to keep moving in whether up or down.
A trader can use indicators such as the moving averages and Bollinger to determine the trend. Traders can also 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 crypto charts trends and these lines can drawn on the charts to show this direction. A crypto upward bitcoin trend will be shown 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 trading lessons section of this website, for indicators a trader can learn about cryptocurrency indicators & their technical analysis on the cryptocurrency indicators section of this website.
