How to read a crypto chart? (Basic Technical Analysis)

Understanding Candlestick Patterns

1. Each candlestick represents price movement over a specific time interval, showing open, high, low, and close values.

2. A green candle indicates the closing price was higher than the opening price, signaling bullish momentum during that period.

3. A red candle means the close was lower than the open, reflecting bearish pressure.

4. The wick or shadow reveals rejection of higher or lower prices — long upper wicks suggest sellers stepped in near the high.

5. Patterns like doji, hammer, and engulfing formations often precede reversals when confirmed by volume and context.

Identifying Key Support and Resistance Levels

1. Support is a price zone where buying interest historically emerges, preventing further decline.

2. Resistance marks a level where selling pressure tends to increase, capping upward movement.

3. These zones are not fixed lines but rather areas formed by prior swing lows and highs, consolidation ranges, or psychological round numbers.

4. When price approaches support, traders watch for bullish confirmation such as strong green candles or rising volume.

5. Breakouts above resistance or breakdowns below support gain credibility when accompanied by increased trading volume.

Using Moving Averages Effectively

1. The 50-day and 200-day moving averages are widely tracked to assess trend direction and dynamic support/resistance.

2. Price trading above both averages often signals a sustained uptrend, while trading below suggests bearish dominance.

3. Crossovers — such as the 50-day crossing above the 200-day — are known as golden crosses and may indicate trend shifts.

4. Moving averages smooth out noise but lag behind real-time price action; they work best when combined with other tools.

5. Shorter-period averages like the 9-day or 21-day help identify intraday or swing-level momentum changes.

Interpreting Volume Signals

1. Volume reflects participation intensity — rising volume during an advance confirms strength, while declining volume on rallies raises caution.

2. Spikes in volume at key turning points often validate breakouts or breakdowns more reliably than price alone.

3. Low-volume rallies can signal weak conviction and increased risk of reversal.

4. On-chain volume metrics, such as exchange inflows and outflows, add another layer beyond exchange-traded volume.

5. Divergences between price and volume — for example, new highs with shrinking volume — frequently precede corrections.

Frequently Asked Questions

Q: What does it mean when a candle has no wick?A: A candle without upper or lower wicks — known as a marubozu — shows strong directional control, indicating aggressive buying (green) or selling (red) throughout the entire period.

Q: Why do some traders ignore timeframes shorter than 15 minutes?A: Ultra-short timeframes contain excessive market noise, including latency effects, bot-driven micro-fluctuations, and order book imbalances that distort genuine supply-demand dynamics.

Q: Can support become resistance after being broken?A: Yes. Once price breaks decisively below a prior support level, that zone often transforms into resistance — a phenomenon called role reversal, rooted in trader psychology and stop-loss clustering.

Q: Is it possible to apply traditional technical indicators like RSI or MACD to Bitcoin?A: Absolutely. These oscillators function identically on crypto assets, though extreme volatility may trigger more frequent overbought/oversold readings compared to traditional markets.