Why charts matter in crypto
Technical analysis uses price and volume to evaluate trends and potential turning points. In 24/7 crypto markets, chart reading gives structure to fast-moving information so you can make consistent, rules-based decisions.
Price quotes 101 (pairs, spreads, market cap)
Crypto assets trade in pairs (for example, BTC/USDT). The first asset is the base; the second is the quote used to price it. Reading BTC/USDT as “1 BTC costs X USDT” prevents confusion when you switch markets.
Every market has a bid price (highest buyer) and an ask price (lowest seller); the difference is the bid-ask spread, which widens in illiquid pairs and affects your execution cost.
“Market cap” helps compare size across coins. Most aggregators rank by price × circulating supply; methodologies explain how prices are consolidated across exchanges and how supply is verified.
Chart types and timeframes
Line, bar, and candlestick charts are the classic formats you’ll find on most platforms. Beginners typically start with candles because they show open, high, low, and close in one glance. Choose a timeframe that matches your goal: minutes for day trading, hours to days for swing trading, and weeks for investing. Multi-timeframe analysis—looking at higher and lower periods together—adds valuable context.
Candlesticks and OHLC—decoding each bar
Each candle (or bar) encodes four facts: open, high, low, close (OHLC). The candle body shows open→close; the wicks show the extremes. A green/white up candle closes above its open; a red/black down candle closes below.
Linear vs. logarithmic price scales
Linear scales space prices equally by absolute change; logarithmic scales space by equal percentage change. For assets that move by multiples (common in crypto), a log scale often makes long-term trends easier to compare. Most charting tools let you toggle between them.
Spotting trend, momentum, and volatility
Trends are sequences of higher highs/lows (uptrends) or lower highs/lows (downtrends). Simple moving averages (for example, 50/200-period) can help smooth noise and visualize trend direction. Momentum tools such as RSI and MACD help you gauge overbought/oversold conditions and shifts in trend strength. Volatility tools such as ATR and Bollinger Bands contextualize “how much” price typically moves.
Volume, VWAP, and what they tell you
Volume validates moves; breakouts on rising volume tend to be more meaningful. On intraday charts, VWAP represents the session’s average price weighted by volume—useful as a dynamic reference for fair value and trade execution.
Support, resistance, and key levels
Support is a price zone where demand historically halted declines; resistance is where supply capped advances. You can map these with swing highs/lows, trendlines, moving averages, or pivot points. Remember that once broken, support can act as resistance and vice versa.
Order books and depth charts
Beyond price charts, the order book lists live buy and sell limit orders at each price. The current bid–ask and the visible “depth” of orders hint at liquidity and potential slippage. Depth charts visualize this same data: price on the x-axis and cumulative order size on the y-axis, so you can spot wide spreads, thin liquidity, or large “buy/sell walls.”
Putting it together: a simple 10-step reading checklist
- Identify the trading pair and quote currency.
- Confirm spot vs. derivatives and your market session (crypto trades around the clock).
- Pick a primary timeframe and add one higher and one lower timeframe for context.
- Choose your scale (linear for short-range moves, log for multi-fold moves).
- Mark trend with moving averages and swing structure.
- Add one momentum indicator (RSI or MACD)—don’t overload the chart.
- Gauge volatility with ATR or Bollinger Bands to size risk.
- Draw support/resistance and note nearby moving averages or pivots.
- Check volume or VWAP for confirmation on breakouts/pullbacks.
- Review liquidity: spread, order-book depth, and likely slippage before placing an order.
FAQ
Are crypto markets really open 24/7?
Crypto spot markets and many crypto derivatives operate continuously, with brief maintenance windows depending on venue. This means price can change at any time, including weekends.
What does “market cap” actually tell me?
It’s a size ranking, typically calculated as price × circulating supply. It doesn’t represent the cash needed to buy the entire network, but it helps compare relative scale across assets. Methodology pages describe how prices are aggregated and which supplies count as “circulating.”
Should I use a linear or log chart?
Use linear when tracking short-range absolute moves; use log to compare percentage moves over long periods or across big price ranges. Try both to see which reveals trend structure more clearly.
What are three indicators beginners can start with?
A moving average for trend, RSI for momentum, and ATR for volatility create a simple, balanced view without clutter.
Any safety notes?
Charts guide probabilities, not certainties. Crypto assets can be volatile, and platforms may lack some investor protections. Review regulator advisories before risking money.
