How to Read Crypto Charts
Understanding price charts is essential for timing your buys and sells better. This guide covers the basics of technical analysis for crypto.
Technical analysis is not a crystal ball. Charts show probabilities, not certainties. Never invest more than you can afford to lose.
Understanding Candlesticks
Each candlestick shows four prices for a time period:
- Open - Price at start of period
- Close - Price at end of period
- High - Highest price during period
- Low - Lowest price during period
Candle Colors
- Green (bullish) - Close higher than open (price went up)
- Red (bearish) - Close lower than open (price went down)
Candle Parts
- Body - Thick part showing open-to-close range
- Wicks/shadows - Thin lines showing high and low
- Long wick = price was rejected at that level
Timeframes
Charts can show different time periods per candle:
| Timeframe | Best For | Noise Level |
|---|---|---|
| 1m - 15m | Day trading | Very high |
| 1H - 4H | Swing trading | Medium |
| Daily | Position trading | Low |
| Weekly | Long-term trends | Lowest |
Beginners should focus on daily or 4-hour charts. Shorter timeframes have more noise and false signals.
Support and Resistance
Support
- Price level where buying pressure typically appears
- Acts like a "floor" - price bounces up from it
- Previous lows often become support
Resistance
- Price level where selling pressure typically appears
- Acts like a "ceiling" - price bounces down from it
- Previous highs often become resistance
When support breaks, it often becomes resistance. When resistance breaks, it often becomes support. This is a key concept in technical analysis.
Volume
Volume shows how much was traded in each period:
- High volume moves - More significant, likely to continue
- Low volume moves - Less significant, may reverse
- Volume spike - Important event, watch closely
Common Patterns
Bullish Patterns (Price May Go Up)
- Higher highs & higher lows - Uptrend
- Double bottom - W shape, trend reversal
- Hammer candle - Long lower wick, short body
Bearish Patterns (Price May Go Down)
- Lower highs & lower lows - Downtrend
- Double top - M shape, trend reversal
- Shooting star - Long upper wick, short body
Basic Indicators
Moving Averages (MA)
- Shows average price over X periods
- Common: 20 MA, 50 MA, 200 MA
- Price above MA = bullish trend
- Price below MA = bearish trend
Relative Strength Index (RSI)
- Measures momentum on 0-100 scale
- Above 70 = overbought (may drop)
- Below 30 = oversold (may rise)
Best Charting Tools
- TradingView - Industry standard, free tier available
- Coingecko - Simple charts, good for overview
- Exchange charts - Built into Binance, Coinbase Pro
Learning charts can lead to overtrading. Most traders lose money. Start small, paper trade first, and remember that doing nothing is often the best strategy.