Saturday, Dec 24, 2022 | Jamadi Al Awwal 30, 1444
Published: Fri 23 Dec 2022, 3:05 PM
Garnering enough knowledge to analyse cryptocurrency prices is the first step to understanding the dynamics of this market. Investments in cryptocurrency are certainly profitable if you are adept at technical analysis of live charts like the Binance BTC live chart.
If you are investing in crypto, you need to be familiar with technical analysis; there is no other way.
What is understood by technical analysis?
Technical analysis is the process through which you can use historical price data and attempt to forecast the future price direction. There are many tools that technicians have which are derived from the price or volume.
The study of historical data is on the charts, and from there, only they can make the judgement about the market participants. You can use these technical tools in various securities such as indices, commodities, stocks, or any other tradable instrument, including cryptocurrencies.
Time frames for crypto charts
If you look over the price chart of crypto, you will notice that some traders take about 15-minute charts, hourly charts, four-day charts, or even the one-day chart to look at.
If someone wants to open or close the position in one single day, then they would look at the short timeframe charts. But if you are someone with a long-term holder, you may want to look at the long timeframe charts.
Different types of charts
Charts are the technician’s main tool, and some different types of charts give you a visual representation of the price.
Line charts
A line chart is one of the common chart types used while analysing things. This type of chart use only one data point, and that is the closing price; if you want to identify the trend, then there will be a closing price on the chart that will be joined with the line,
Bar charts
A bar chart contains much more information than a line chart. The bar chart has an open, close, high, and low option used to depict the bar. These charts are also known as the OHLC, which means open, high, low, and close.
Candlestick charts
The candlestick charts are the one which originated in the 1,700s in Japan, and the first rice merchants used them. Like the bar charts, these candlestick start also use the high, low, open, and close, but the demonstration is more visual, which makes it more popular among the traders.
It is popular among the crypto trades as they use it similarly to the traders who trade in different securities.
You can get charting services that will provide frames in the interval if you need them for short-term traders. Each candle will include two parts which are the body and the shadows. The body will represent the opening and closing price, whereas the top shadow shows the highest price of that crypto at that time. However, the bottom shadow will show the lowest price in the time interval.
If you learn how to read it and if you read it correctly, you will be able to predict the future outcome of the price. It will make things easier for you, and you can make strategic decisions.
Patterns of technical analysis
Head and shoulders
Head and shoulder is the reversal pattern that may show up at the bottom or peak of the ongoing trend. If you see such a pattern near the bottom of that trend, that will be known as an inverted head and Shoulder. The pattern will show you a tug-of-war between sellers and buyers; the side that will come up on the top will be greater pullback or pushback.
Wedges
The wedge is the pattern that will appear at the start of the trend to settle down. At last, it results in a breakout. The market does mode sideways to wedge back and forth, and then it will move in the firm direction.
Support and resistance
It is one of the crucial parts you need to do, which is to understand the support and resistance so you can read crypto charts. The support level in the charts will refer to the price level, which does not fall below the fixed period.
On the other hand, the resistance level refers to that price where the assets are not expected to rise, which is the level where the seller may also outnumber the digital assets. The experts here suggest the resistance and support level that does help the trader in taking the passion for cryptocurrency.
Conclusion
Understanding the patterns of cryptocurrency does help traders in making informed decisions. However, if you want to trade in crypto, then you would require an efficient platform for trading, and while choosing the one, make sure you choose the right one so everything can work effortlessly.
— Deepak Jain is an independent blockchain publicist
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