A rainbow chart is a technical analysis tool that visualizes the historical price movement of Bitcoin (BTC). It uses seven different colors to represent the percentage increase in the price of Bitcoin, namely:

Colors and Their Meanings

- _Dark Red_: 0-20% increase

- _Red_: 20-50% increase

- _Orange_: 50-100% increase

- _Yellow_: 100-200% increase

- _Green_: 200-400% increase

- _Blue_: 400-800% increase

- _Purple_: 800% increase and above

How to Use a Rainbow Chart

1. Identify the current price bands to determine whether Bitcoin is overpriced or underpriced.

2. Look for buying opportunities when the price is in the red, orange, or yellow bands.

3. Look for selling opportunities when the price is in the green, blue, or purple bands.

4. Pay attention to the trend: an upward movement indicates a bullish trend, while a downward movement indicates a bearish trend.