How to read crypto charts – A beginner’s guide
It doesn’t come easy, but at least after reading this article, you’ll have a better understanding of the basics of cryptocurrency charts. Welcome to a guide on how to read cryptocurrency charts for dummies.
Did you know? Michael Novogratz, a former hedge fund manager and billionaire, started investing in cryptocurrencies in his 50s. After a successful career on Wall Street, Novogratz saw the potential in digital currencies and became one of the most prominent figures in the crypto world. His late entry into crypto trading shows that it’s never too late to embrace new financial opportunities and succeed in an emerging market.
Decoding cryptocurrency charts
One of the first things you likely notice when opening a trading platform is the option to change the type of chart displayed. Let’s start by defining the main types of charts and their common uses.
Line charts
Line charts are the simplest type of chart used in cryptocurrency trading. They plot a line from one closing price to the next over a specified period. This type of chart is useful for identifying general trends and long-term price movements. However, they lack detailed information about intraday price fluctuations.
Check out the example below. The line moves up and down in response to price changes, showing the overall trend over time.
Bar charts
Bar charts provide more detailed information than line charts. Each bar represents a specific time period (e.g., one day, one hour) and displays the opening, closing, high and low prices for that period.
The top of the bar indicates the highest price, while the bottom shows the lowest price in that time period.
A small horizontal line on the left of the bar represents the opening price, and a small line on the right represents the closing price. Bar charts help traders analyze the strength and direction of price movements over time.
