Open any crypto exchange and you are confronted with a chart that looks like a financial earthquake seismograph. Green and red blocks, lines going everywhere, numbers that mean nothing yet. Within five minutes of reading this, you will know what most of it means.
The Candlestick
The basic unit of a crypto chart is the candlestick. Each candle represents one time period could be 1 minute, 1 hour, 1 day, or 1 week depending on your chart settings. Each candle shows exactly four things:
- Open price: where the price was at the start of that period
- Close price: where the price was at the end
- High: the highest point reached during the period
- Low: the lowest point reached during the period
The colored body of the candle shows open-to-close. The thin lines above and below (called wicks or shadows) show the high and low. A green candle means price went up during that period. Red means it went down.
What Volume Is Telling You
Below the price chart you will see bars this is volume. Each bar shows how much of that asset was traded during that candle's time period. Volume is the market's conviction meter. A large price move with high volume means a lot of participants agreed. The same move with low volume is less convincing it may not hold.
Watch for volume spikes. A sudden volume spike on a red candle often signals capitulation panic selling which can mark a bottom. A volume spike on a green candle during a breakout suggests genuine buying pressure, not a fake-out.
Support and Resistance in Practice
Look at any crypto chart and you will notice prices tend to bounce around certain levels repeatedly. That level where Bitcoin keeps finding buyers every time it drops to it? That is support. The ceiling price keeps hitting and failing to break through? That is resistance.
These levels matter because traders remember them. If Ethereum bounced at $2,000 three times in six months, thousands of traders have that number in their head. They place buy orders there in advance. Which itself creates the bounce. Markets are partly self-fulfilling.
The 200-Day Moving Average
A moving average smooths out price noise. The 200-day MA is the average closing price over the last 200 days, updated daily. It is the single most-watched long-term trend indicator in crypto. Bitcoin trading above its 200-day MA generally means the long-term trend is up. Below it, the trend is down. In every Bitcoin bear market, the price has eventually crossed below the 200-day MA. In every recovery, crossing back above it has been significant.
Start Simple
Charts can get extremely complex dozens of indicators, multiple timeframes, oscillators, and pattern recognition. Start simple: learn to read candles, understand volume, identify obvious support and resistance. Add complexity only when you understand what you already have.
Key Takeaways
- Each candlestick shows open, close, high, and low for one time period
- Green candle = price up that period; red = price down
- Volume confirms whether a price move has conviction behind it
- Support and resistance are price levels where reversals repeatedly occur
- The 200-day moving average tracks long-term trend direction