Reading and interpretation of cryptocurrency trade charts
As cryptocurrency popularity continues to grow, traders and investors are increasingly focusing on online platforms and tools to monitor market trends and make informed decisions. One important aspect of cryptocurrency trade is understanding how to read and interpret trade charts. In this article, we will divide the basics of cryptocurrency trade charts and give advice on how to effectively analyze these charts.
** What is the volume of trade?
The volume of trade refers to the total number of transactions within a certain period of time, usually measured in units such as dollars or coins. For merchants, this is an essential metric to understand market dynamics as it indicates the level of interest and activity in private cryptocurrency. In other words, the volume of trade is the main indicator of liquidity and demand.
How to read trading volume charts
To effectively read and interpret trade charts, follow these steps:
1
Understand the type of chart : different types of charts of different types that indicate different market conditions. For example:
* Line diagram: focus on price movements for time.
* Bar diagram: Displays the closing prices of each band.
* Candlestick Chart: Shows the highest and lowest prices, as well as open and close prices for every day.
- Identify trade volumes : Look for trade changes that may indicate a significant market activity. For example:
* Increased or reduced volume may indicate a price change.
* The increasing or falling volume around time can signal the upcoming overvoltage or decrease.
3
Analyze the context of the chart : interpreting the sales charts, note the following factors:
* Time schedule: Trade volume is very different over the period. Short -term trade has large volumes, while long -term transactions can see lower volumes.
* Market conditions: Economic indicators such as GDP, inflation rates and interest rates can affect trade volumes.
* Liquidity level: High liquid (high volume) or low liquidity (low volume) can affect market dynamics.
- Look for models : In the diagram, identify repeated models that can signal a trend or possible breakout. For example:
* A steady increase in trade volume after the initial retreat may indicate strong upstream.
* The decline in trade volumes after overvoltage may indicate a correction or revolution.
Ordinary viewing models
1
High tides : Increased sales following increasing prices, pointing to demand and interest in asset.
- Falling tides : Reduced trade volumes may indicate a distribution of pressure sales or potential.
3
Candlestick Articles : Some candlestick patterns, such as a hammer or shooting star, can signal a turn or break.
- Bullish or Beerish Engulfing Articles
: These models show that vendors (bulls) try to attract buyers (bears), while Bulls (bears) try to attract sellers.
Interpretation of trade charts
To make conscious decisions by interpreting the sales charts, use the following criteria:
1
The amount of price : When the price exceeds the average average of 20 -period variables and the sales volume increases significantly, this may indicate a possible breakout.
2
Volume pulse : If tandem increases tandem with price movements (for example, both increasing and falling), but still shows some volatility, this could indicate a change in the intermediate term trend.
3
Trends of trade : Look for consistent trade trends that can drive your decision.
Conclusion
Reading and interpretation of trade charts is an essential skill for traders to acquire by investing in cryptocurrencies.