Many traders have heard of the candlestick chart, especially the Forex version. Candlestick charts were first popularized by Japanese rice traders during the 19th century. Today, they are used heavily in the Forex market. But if you’re just starting out trading, or have been trading for a while, you might be missing a trick. Cryptocurrency charts don’t just show you which way a currency is moving… they can also reveal important information about that currency’s potential strength.
Most of the time, a trader will look at two types of charts: the strength index chart and the momentum indicator chart. But what do those two things mean? Traders look at support and resistance levels to get an idea of when the price is likely to reverse. Both of these indicators, in combination, give you a good picture of the market’s psychology. Here’s why they are important to your trades:
In general, it’s more profitable to enter into a position at a resistance level that is lower than the current price. This is because, on average, more traders will take profits on low-priced trades, leaving you with less risk. However, if you’re going for the big jump, look for time frames that show the high point (the resistance) for the previous day, plus the low point (the support).
Do you know how to read currency chart text? Even if you’re just using candlestick charts to predict which way a particular currency is going to move, you need to learn about technical analysis. There’s more to technical analysis than candlestick charts. In fact, you need to learn about trend analysis, breakouts, volume indicators, volatility, trends, retracements, support and resistance levels. It takes more time to become an expert at this stuff than it does to trade in cryptosurfs, but it’s a necessary skill for anyone who’s going to do any serious trading in the future.
One of the things you should get started with is looking over some live cryptocurrency prices. You can easily get these from websites such as Metatrader. If you have a platform that supports multiple currencies, then you might even want to download some live prices from different platforms to get a feel for how they move. If you don’t have a platform, then it’s important that you at least have a free forex broker account so you can practice trading with live prices. The internet has made trading much easier, but it’s still not a substitute for having a good broker and learning your craft.
As mentioned above, trend analysis is very important. But when looking over cryptomarket charts for possible trend indicators, you’ll need to be especially concerned with breakouts. What makes a breakout move significant? If a currency’s value begins to move up suddenly and without continuing resistance levels, that’s a strong signal for you to buy.
Resistance levels are important on chart setups. When setting up your charts, make sure you set up your data in the same way on all of your charts. This will help you see what price patterns or signals are building up as you move your money around the market. When looking over a set of line charts, the most common traders will usually look at the moving averages. A rising moving average gives you an idea of where the market is heading. If you’re looking at a resistance level, this will give you an idea of where the price is likely to break out.
Most traders want to trade in longer-term markets, so if you’re a long-term trader, you might want to stick to day or short-term charts. There are a number of tools available to help you create long-term charts that are useful for your trades. However, day and short-term charts aren’t suitable for all traders, so depending on your trading style, you should think about a combination of the two. There are also high-speed forex charts available that allow you to look at the technical indicators in real-time.