What exactly are cryptocurrency price charts?

• The fundamental features of a cryptocurrency price chart

• Candlesticks: How to Read Them

• What the market's candlesticks are saying

In a previous post, we talked about how bitcoin's price is determined, the role of exchanges in bringing buyers and sellers together to trade, and the types of basic news that exchanges offer regarding trades.

Price is, of course, fluid - more so than traditional assets because there are no established trading hours - and continuously altering as exchanges accommodate changing buyer and seller sentiment. A bitcoin price chart depicts the pattern of changing sentiment, which can provide clues as to where the price will move next.

As a trader, your task is to evaluate all of the data provided by a bitcoin price chart and utilize it as part of your Technical Analysis toolkit to forecast where price will move next.

Basics of Bitcoin Price Chart

At its most basic level, a bitcoin price chart is a two-dimensional line graph that depicts the price history of bitcoin trades between two currencies.

Bitcoin's worth is always measured in terms of another currency, called a Trading Pair.

Trading pairings are presented against base currencies, or the most liquid currencies. Because there are thousands of cryptocurrencies, it would be impractical to allow trading pairs between all of them and all FIAT currencies. Instead exchanges provide trading against base currencies, which are typically:

• Fiat currency majors

• Bitcoin and

• Ethereum

• Most important stablecoins.

A stablecoin is a cryptocurrency that assures the stability of a fiat currency to which it is tied in one of several ways. Stablecoins are the subject of this article.

Here are some scenarios of each category.

• EUR/BTC - Trade Euros for Bitcoins

• USD/BTC is the exchange rate between the US Dollar and Bitcoin.

• Bitcoin to Euro Exchange (BTC/EUR)

• Trade BTC/LTC (Bitcoin to Litecoin)

• Tether to bitcoin exchange USDT/BTC (Tether is a stablecoin)

The trading chart will display a myth designating the present cost for the selected Pair, which will modify as you watch, becoming green when it rises and red when it falls.

The chart for Bitcoin from Bitstamp's Tradeview for March 16th, 2021 is shown below.

It's critical to remember that the chart is set in the context of the particular Trading Pair - USD/BTC.

The most important aspects of a bitcoin price chart

• The currency pair with which it is associated - in this scenario, USD/BTC

• The x-axis is a time scale; this chart is set to display the price for the last 24 hours.

• The y-axis is a linear value scale (for example, USD) that can be changed to a log scale.

• Over time, price plots are created, resulting in a line chart and a spot price of $55,423.06.

The movement shown in the graph is unique to this currency combination. BTC may be down against the dollar, but if ETH is falling faster, BTC is up when combined with ETH.

The most basic sign of sentiment is a simple line price chart. The peaks and troughs in Bitcoin's price history are linked to important events and trends, as you can see. Remembering the difference presented, the chart is more useful to Fundamental Analysis and Investing at this size.

Trends That Can Be Seen Log Scale vs. Linear Scale

Only the most dramatic changes are visible because to the exponential rises in bitcoin's price over a ten-year period (600x).

• 2017 The ATH for the bull market is $20,000.

• 2018/2019 The bear market has dropped below $3,000.

• The Covid Crash is expected to occur in March 2020, with prices dropping below $5,000.

• Bull Market in 2020/21 - $61k ATH

You can gain a new perspective if you switch to a log scale, where the Y axis depicts two equal % changes as the same vertical distance on the scale.

Candles & Time

It is up to you to pick the time period in which you want to operate in your search to understand where price is heading, keeping in mind the difference between Trading - short-term decisions - and Investing - long-term positions.

Technical Analysis is aided by charts, which allow you to zoom out and look at the longest time scale imaginable, or zoom in and focus on price movement over a small period of time.

The bitcoin price charts, within your selected time range, give a tale about how the price has moved - its volatility- to provide a plot for the scale you've selected

However, if you want a more thorough perspective of the price movement, look for a chart that incorporates Candlesticks (commonly abbreviated to just Candles) because of their shape. The top and bottom of the candle body, as well as a wick above and below, are the four key elements.

Instead of a single plot, candles flesh out a simple line plot that provides considerably more granular information about what occurred to pricing within a particular block of time.

For example, the price of bitcoin may have averaged $37,000 on a given day, but this does not indicate volatility. How high did it go, how low did it go, and was it more expensive than before？

All of these are necessary for trading.

Price Movement

The chart above is for the same time period as the simple line chart given earlier in the article, but it has Candlesticks for each 15-minute interval.

A green candle indicates that the price increased over the time period in question, while a red candle indicates that the price decreased. As a result, you'll see phrases like 'hoping for green candles' on social media.

A short check at a candle chart will provide price direction based on its color, but a basic plot would have sufficed. Candles fill in the gaps in terms of how price fluctuated during that time period.

The Starting Bid

Each candle will indicate when the price first began to rise (started). The Opening Price is indicated at the bottom of the candle body if the price has climbed throughout the chosen period (shown by a green candle). The Opening Price is at the top of the candle body if the price declined.

The Final Price

Closing Price is the inverse of Opening Price. If the price fall during the selected period, the Closing Price will be at the bottom of the candle, and if the price rose, the Closing Price will be at the top.

The Most Expensive

The closing and opening prices define cost activity over time, but you want to know how the price changed by knowing the highest price reached.

The wick tip protruding from the top of the candle is an example of this.

The wick will extend from the Closing Price (top of the candle body) to the highest price reached if the price has increased.

The Most Economical

A wick extending from the bottom of the candle, on the other hand, will reflect the lowest price that was reached.

Duration of a candle

A trade chart is interactive, allowing you to zoom in or out from a temporal perspective. So, depending on how detailed you want to get, you can look at price candles over different time periods.

The following are the usual candle time cohorts:

• 1 minute

• 5 minutes

• 15 minute

• 30 minutes

• 1 hour

• 6 hours

• 12 hours

• 1 working day

• 7 Days

• 14 Days

• 1 Month

As you process this information, you should be able to enjoy the story that candles are passing on. The longer a candle has been open, the more price has moved over time, and the longer the wicks have been open, the larger the range of movement, which is referred to as Volatility.

The higher the possibility to buy/sell and profit in a turbulent market, the higher the risk, but this is a two-edged sword. Volatility=risk.

The first step in technical analysis is to analyze cost movement with the aid of candles, as they provide a first layer of detail of price signal and pattern.

Recognizable signals and patterns will be interpreted by a successful trading method as indicators of specific future price movement.

Trading volume is the next signal we'll look at in the following piece.