How to Read Crypto Charts: Learn to Master the Market in 2024

Crypto assets like Bitcoin (BTC) tend to be more volatile than traditional investments like stocks, with price direction often changing rapidly. Crypto charts provide a powerful way to anticipate the market’s next moves based on chart patterns and technical analysis.

In this guide, we discuss all the basics you need to know, including how to read crypto charts and the ways crypto chart patterns can help guide your trade timing.

Key Takeaways

  • Basic chart indicators such as MACD can suggest future price movements at a glance.
  • Chart patterns can be used together to confirm probable price movements.
  • Candlestick charts create small patterns that can also be used for confirmations.

What is a Crypto Chart?

A crypto chart is a visual tool that displays data about crypto price movements and trading volume to help traders determine trends or future market movements. While crypto charts analyze past trading data, chart patterns often indicate likely future price movements, providing another data point to inform trading decisions.

Why Do Crypto Traders Use Crypto Charts?

Charting and technical analysis offer insight into potential price movements for several types of investments, including stocks, commodities, and forex. However, the increased volatility of crypto markets makes crypto charts a vital tool for traders.

In 2017, Bitcoin’s price surged from under $1,000 to more than $19,000, about a 20x increase. In the following year, Bitcoin lost more than 75% of its value, falling below 4,000. That level of volatility can be brutal on the portfolios of buy-and-hold investors, but there were dozens of profitable trades to be had along the way. Technical charts may have highlighted those opportunities, pointing to the optimal time to enter or exit the trade.

Crypto charts provide an additional data point for investment decisions. Think of charting and analysis as a prediction tool that can indicate market moves. Using data and patterns also helps prevent investors from making emotional investment decisions, such as buying because the price has gone up or selling at the bottom of a crash.

Crypto Chart Indicators

Crypto Chart Indicators

Simple price charts may not hold many clues regarding market direction but can be useful to identify short-term support and resistance as well as consolidation. Crypto chart indicators add additional detail, showing where trendlines cross, intraday price movements, trading volume, and much more.

TradingView, one of the most popular charting applications, offers more than 100 chart indicators. We detail some of the most popular indicators below.

  • Overlays are indicators that are shown directly on the chart.
  • Oscillators are indicators shown above or below the chart in their own space, such as MACD, explained below.

Moving average (MA)

A moving average uses an average price over a set duration, smoothing the erratic ups and downs of the market. Traders often use two moving averages in combination. For example, when the short-term MA trend line crosses above the long-term MA, it could indicate a bullish signal. A variation called an exponential moving average (EMA) uses two time periods to calculate the value.

Moving Average
BTC/USD. Source: TradingView

Moving Average Convergence Divergence (MACD)

A MACD utilizes two exponential moving averages to map a divergence and indicate buy/sell signals, as well as oversold or overbought conditions.

MACD
BTC/USD. Source: TradingView

Stochastic Oscillator

The stochastic oscillator can indicate overbought or oversold conditions, suggesting the market may take a short-term reversal.

Stochastic Oscillator
BTC/USD. Source: TradingView

Bollinger Bands

Named after the indicator’s developer, John Bollinger, Bollinger bands can indicate overbought or oversold conditions. Often, traders use multiple indicators as a confirmation rather than counting on just one.

Bollinger Bands
BTC/USD. Source: TradingView

Relative Strength Index (RSI)

Similar to some other indicators, RSI can indicate overbought or oversold conditions. The relative strength index measures the speed and magnitude of a price movement. In effect, RSI seeks to answer to question of whether the market may have moved too quickly and could retrace.

RSI
BTC/USD. Source: TradingView

Features of a Crypto Trading Interface

Crypto charts are an integral part of advanced trading interfaces. An advanced trading platform offers the ability to use limit orders or market orders, as well as manage positions with stop-loss orders and take-profit orders.

  • Limit orders, also known as maker orders, allow you to set a price for buy or sell orders.
  • Market orders, also known as taker orders, utilize open limit orders in the order book to fill your order at the prices offered.
  • Stop-loss orders and take-profit orders allow you to set a price trigger to exit a position automatically.

Coinbase Advanced offers a good example of an advanced crypto trading interface, as shown below.

Coinbase Advanced live trading interface
Source: Coinbase Advanced live trading interface
  1. Change chart settings and add or remove indicators as needed.
  2. View chart indicators; the chart above shows MACD, in this case indicating a short-term price drop.
  3. View existing limit orders on the exchange in the order book. This data can also be viewed using a depth chart.
Coinbase Advanced live trading interface
Source: Coinbase Advanced live trading interface
  1. View the spread between the ask price (red sell orders) and the bid price (green buy orders).
  2. Choose your order type, trade amount, and order options.

Technical Analysis and Crypto Charts

Crypto charts provide a basis for technical analysis. Indicators such as MACD or Bollinger bands offer a way to quickly display indicator data on live charts. However, some technical analysis requires a bit of additional work. For example, Fibonacci retracement requires drawing on a chart and basic calculations.

Fibonacci Retracement Levels

Rather than charting existing data, Fibonacci levels seek to predict possible levels for price retracements based on set percentages such as 23.6%, 38.2%, 61.8%, or 78.6% which could identify support or resistance. Many traders also use 50% retracements in plotting potential price moves, and many crypto traders, in particular, use 38.2%, 50%, 61.8%, and 100% levels.

Fibonacci retracement analysis begins following a reversed trend, i.e., a break in pattern from lower lows or higher highs. Use the crypto chart to identify and mark relevant price points, such as the reversal point, using drawing tools in charting software. Then calculate possible retracement levels by drawing lines on the chart. TradingView, a leading chart provider, provides a library of user-generated scripts that can automate Fibonacci analysis or other tools.

The charting technique originates from Fibonacci sequences, which are numbers that are equal to the sum of the two preceding numbers. The concept is related to the golden ratio, which occurs in nature. The theory behind Fibonacci retracement may seem arbitrary. However, in markets where the technique is commonly used, technical trading levels such as Fibonacci can become a self-fulfilling prophecy because so many traders are basing trades on the same levels.

The crypto technical analysis encompasses crypto chart indicators, covered earlier, as well as candlestick patterns and crypto chart patterns, which we’ll discuss later.

Crypto Charts and Candlesticks

Most crypto trading platforms enable candlestick charts by default. The charting format gets its name from its resemblance to candlesticks with wicks and provides more information about trading activity within a specific time period.

  • Green candlesticks, also known as bullish candlesticks, indicate price appreciation during the measurement period.
  • Red candlesticks, also known as bearish candlesticks, indicate a price drop during the measurement period.
Coinbase Advanced live trading interface
Source: Coinbase Advanced live trading interface

Components of a Candlestick

A candlestick tells a story of the price action during the measurement period. Candlesticks use three components, in addition to a color, to detail the price movement.

  • Upper wick, also known as an upper shadow or tail
  • Body, typically shaded green or red
  • Lower wick, also known as a lower shadow or tail

First, let’s learn more about the candlestick body.

  • On a green candle (the price went up), the bottom of the body represents the opening price, whereas the top represents the closing price.
  • On a red candle (a price decrease), the top of the candle represents the opening price, whereas the bottom represents the closing price.

Next, let’s look at the wicks or shadows.

  • The top wick represents the highest price during the measurement period.
  • The bottom wick represents the lowest price during the measurement period.

Wicks represents trades that occurred above or below the opening and closing price during the measurement period.

Candlesticks can also form patterns that may indicate price direction. Additionally, a single candle of a specific shape can indicate a reversal. For example, a hammer or hanging man, shown below, points to a short-term price reversal.

Multiple candles can form patterns that may also indicate future price action. For instance, a morning star candlestick pattern marks a bullish reversal, as shown below.

A morning star candlestick pattern marks a bullish reversa

Crypto Chart Patterns

While candlestick chart patterns or single candlesticks can highlight trading opportunities, taking a big-picture view can also help you identify patterns, particularly for tracking long-term moves. Examples like triangles, wedges, head and shoulders, and cup and handle patterns are all commonly used crypto chart patterns.

TrianglesWedgesHead and ShouldersCup and HandleAccumulation AreaOther Crypto Chart Patterns
  • Ascending triangles are bullish chart patterns marked by a flat resistance line at the top and a pattern of higher highs forming at the bottom.
  • Descending triangles, however, are bearish. These triangles use a flat line at the bottom to mark support, with a pattern of lower lows forming the top. This pattern usually indicates an imminent drop below support.

  • Ascending wedges use both higher highs and higher lows to form a wedge, indicating the upward trajectory is losing steam. Ascending wedges are a bearish crypto chart pattern.
  • Descending wedges take a downward slope, drawing lines along lower highs and lower lows, which often indicates waning selling pressure.
  • A head and shoulders pattern displays a low peak, a higher middle peak, and a third peak, the last of which peaks near the level of the first peak. This long-term trading pattern indicates a coming downtrend.
  • An inverted head and shoulders take the opposite shape as a head and shoulders, with obvious valleys, the first and last of which are shallow compared to the deeper middle valley. Following the last valley, traders can generally expect an uptrend.

Named after its appearance, a cup and handle form a large cup shape, followed by a smaller cup shape, the latter being the handle. Cup and handle chart patterns are bullish for long-term prices.

Up and down without breaking out one way or another is often seen as accumulation. An accumulation pattern can typically be held within a rectangle, with most of the trading activity occurring within the top and bottom lines. The top line is resistance, whereas the bottom line marks support. Accumulation is seen as a bullish pattern.

  • Double top (bearish)
  • Double bottom (bullish)
  • Rounding top (bearish)
  • Rounding bottom (bullish)
  • Bullish flag
  • Bearish flag
  • Bullish pennant (similar to descending wedge)
  • Bearish pennant (similar to ascending wedge)
  • Three rising valleys (bullish)

Top Crypto Charting Software

To find the best live crypto charts, you can consider some of the leading chart providers. Note: these are paid providers, often with an entry-level tier that offers limited functionality.

  • TradingView
  • MetaTrader4
  • Coinigy
  • CryptoWat.ch
  • CryptoView

However, many popular exchanges like Coinbase offer TradingView functionality. eToro, a popular crypto broker, also provides TradingView charts. eToro’sTradingView guide can help you get started.

Tips for Successful Crypto Trading

Crypto prices can be much more volatile than traditional markets. To reduce risks and maximize gains, consider the following tips.

Trade wisely: Most importantly, never invest more than you can afford to lose.

Wait for confirmation: Look for more than one signal before making a trading decision.

Use stop limit orders: Take-profit and stop-loss orders let you take profits automatically or cut your losses to protect your trading capital.

Use leverage sparingly: Small market moves can wipe out your margin in seconds when using high leverage. Consider using lower leverage or none at all.

Utilize demo platforms: OKX, eToro, and several other trading platforms offer demo trading, where you can practice or test strategies without risking real money.

    Crypto Chart Challenges

    Trading crypto using chart patterns and indicators can be fun and profitable, but it can also come with some challenges as well.

    Incomplete Data

    Many cryptocurrencies don’t have much trading history or may not be supported by popular trading software. This makes it more difficult to make long-term trades based on chart patterns.

    Market Manipulation

    Smaller markets can be moved around by buyers or sellers with large positions. This susceptibility to manipulation can make chart patterns less meaningful.

    News

    Announcements or news events can move markets, breaking and forming chart patterns to the upside or downside.

    The Bottom Line

    Crypto trading can be extremely profitable but also brings a risk of losing your trading capital quickly, particularly when trading with high leverage.

    Learning how to read crypto charts takes a commitment to increasing your knowledge and testing to be sure you’re reading indicators correctly. Crypto trading platforms like OKX and eToro offer demo trading, where you can use crypto charts to practice trading with a virtual account. This removes the risk while you hone your trading skills.

    The information in this article does not constitute investment advice and is meant for informational purposes only.

    It’s essential to conduct in-depth research and invest solely within your financial comfort zone, acknowledging the possibility of total loss. Crypto trading and investments are high-risk, and you should be prepared for the absence of safeguards in adverse scenarios. 

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    Eric Huffman
    Editor

    Eric Huffman has a diverse background ranging from business management to insurance and personal finance. In recent years, Eric's interest in finance topics and in making personal finance accessible led to a focus on cryptocurrency topics. Eric specializes in crypto, blockchain, and finance guides that make these important topics easier to understand. Publications include Milk Road, Benzinga, CryptoNews.com, Motor Trend, CoverWallet, and others. Always learning, Eric holds several certifications related to crypto and finance, including certificates from the Blockchain Council, Duke University, and SUNY. When he's not writing, you might find Eric teaching karate or exploring the woods.