If you are into trading and deal with cryptocurrencies, then it is important to know how to read crypto charts. Anyone who trades in the stock market needs to have the basic skill ofreading charts. Whether it is the stock market or the cryptocurrency markets, the charts help you in your trading activity. Charts mainly show two characteristics, price and volume. Price on a crypto chart shows changes in cost of the cryptocurrency over time. Volume shows how many units of the cryptocurrency have been traded.
There are two main charts used to trade cryptocurrencies – the line chart and the candlestick chart. Let’s take a look at what these charts are and how to read them.
1) Line chart
This is the simplest of charts and shows the movement of prices in the form of a line. A line moving up indicates an upward trend in the price of cryptocurrencies. Line sloping downwards shows a fall in prices. The line chart can be prepared for any duration. It may be for a year where it shows the movement of prices over the different months of a year. This is the chart used by investors to track the movement of the cryptocurrencies that they have purchased.
Those who do day trading (buying and selling currencies on the same day) would use a chart that shows variation in prices over a day. It shows variation in prices over minutes or seconds. Day traders use real-time charts that show the movement of prices at that instant. As prices can fluctuate within seconds, day traders need this kind of a chart.
The line chart below shows the movement of a cryptocurrency over a period of a year. The months of the year and the changes in prices are shown in this chart. The volume is also shown in the form of a bar graph. For each movement of price, the corresponding volume is shown.
Let’s understand how to read this chart.
From this chart, we can make out that the highest price of the cryptocurrency was at the end of June when the price nearly touched $13,000. The lowest price was at mid-March when the price fell below $3,000 and almost touched $2,000.
If you look at the chart, you can see that at the beginning of May, the prices of the cryptocurrency showed a sudden upward movement at $4,000. From then on, it kept moving up. Had you bought the cryptocurrency at that time, you could have earned a handsome profit. How would you have known that the price would go up? The answer lies in the volume of transactions. Look at the volume bar graph, you can see it shoot up to more than 30,000 transactions. Volume indicates that more people are buying. It is a sign that there is a definite upward trend. Had you known to read this trend, you could have made a lot of money.
When the volume bar is green, it indicates there are more buyers. When it is red, it indicates the trend is in favor of selling. Reading the price and volume from a line chart is just one way of reading a crypto-chart. Many other tools can be used. For instance, a moving average is a tool used in technical analysis to read price changes in a more systematic way. There are many such tools that technical analysis provides. Mastering technical analysis can help you read a crypto-chart well and understand the trends.
2) Candlestick chart
This is a favorite chart used by advanced traders to help them to understand market trends and predict which way the market moves. This chart uses a symbol called a candlestick. The symbol shows the high, low, opening, and closing prices. One candlestick represents a period of time, which could be a minute, an hour, a day, or even a month – depending on the type of chart used.
If the candlestick is green, it indicates that the closing price is more than the opening price. This means the trend is in favor of buyers. A red candlestick indicates that the closing price is less than the opening price, showing a trend in favor of sellers. Reading these candlesticks is a subject by itself and helps a trader to get a better understanding of the market. It is a preferred tool by traders to take trading decisions.
Candlesticks form many patterns that can indicate a change in trend. A smart trader or investor will spot this trend and take a quick decision that can help in earning profits. For example, take a look at this candlestick formation known as the hammer.
The hammer shows that prices fell low, but then again rose well above the low and closed above the opening price. This tells you that buyers overtook sellers and pushed the price upwards. If you spot such a candlestick on your chart and it is accompanied by good volume, then it is a sure sign of a bullish or strong upward trend. This indicates prices are going to go up. A candlestick chart doesn’t tell you only about prices and volumes, it even tells you about the psychology of traders. It helps you get an insight into the thinking process of other traders. It helps you get a feel of the general sentiment of the market.It must be noted that one sign by itself cannot be used to make a definite prediction. A seasoned trader will look for various signs on the chart to confirm what is happening.
All this shows that you can read the crypto chart in the best possible way by learning technical analysis. This subject equips you with tools to be able to read charts and understand the message the chart is trying to convey. Mastering technical analysis can help you become a good trader who is able to predict market trends and take decisions accordingly. This is a good way of making profits by reading crypto charts.
UK retail sales drop, NatWest loss dampen FTSE 100 mood
By Shivani Kumaresan and Amal S
(Reuters) – The FTSE 100 was muted on Friday as a bigger-than-expected drop in January retail sales underscored the business damage from a prolonged nationwide lockdown, while NatWest group fell after swinging to an annual loss.
The commodity-heavy FTSE 100 was flat as gains in miners Anglo American, Rio Tinto and BHP Group capped losses.
Oil producers BP and Royal Dutch Shell fell 1.2% and 0.5%, respectively as crude prices slid.
Data on Friday showed British retail sales tumbled much more than expected in January as non-essential shops went back into coronavirus lockdowns. Flash readings of business activity data, due at 0930 GMT, are likely to show the services sector struggling to return to growth in February.
“The 8.2% fall was considerably higher than we’d expected (around 4%), and provides clear evidence the hit to consumer spending is noticeably larger than it was during the November restrictions,” said James Smith, market economist at ING.
He added focus will now be on UK’s COVID-19 vaccination program and easing of restrictions, to drive economic recovery.
The FTSE 100 has recovered nearly 35% from its March 2020 lows but has been largely range-bound since the beginning of this year as a nationwide lockdown hurt business activity, undermining hopes of economic growth in the second half of the year.
The domestically-focused mid-cap FTSE 250 index rose 0.2%, with consumer and industrials stocks leading gains.
NatWest fell 0.6% after the financial services provider swung to a full-year loss for 2020 after COVID-19 lockdowns crunched household spending.
Segro Plc rose 1.7% after the real estate investment trust reported a near 11% jump in annual profit for 2020.
Banking group TBC Bank fell 2.3% after a slump in annual underlying profit due to lower interest rates and limited lending growth in the fourth quarter from the COVID-19 pandemic.
(Reporting by Shivani Kumaresan and Amal S in Bengaluru; Editing by Vinay Dwivedi and Krishna Chandra Eluri)
Dollar slips further after disappointing jobs data, sterling shines
By Tommy Wilkes
LONDON (Reuters) – The U.S. dollar slipped further on Friday and the euro rebounded after disappointing U.S. data dented optimism for a speedy recovery from the COVID-19 pandemic, while sterling edged towards the $1.40 mark.
The U.S. currency had been rising as a jump in Treasury yields on the back of the so-called reflation trade encouraged investors back into the greenback.
But an unexpected increase in U.S. weekly jobless claims soured the economic outlook and sent the dollar lower overnight.
On Friday it traded down 0.1% against a basket of currencies, the dollar index now at 90.474.
The string of soft labour data is weighing on the dollar even as other indicators have shown resilience, and as President Joe Biden’s pandemic relief efforts take shape, including a proposed $1.9 trillion spending package.
The euro rose 0.2% to $1.2113. The single currency showed little reaction to German and French flash purchasing manager index data, which unsurprisingly showed a slowdown in activity in January.
Despite the recent rise in U.S. yields, many analysts think they won’t climb too much higher, limiting the benefit for the dollar.
ING analysts said that “the rise in rates will be self-regulating, meaning the dollar need not correct too much higher.”
They see the greenback index trading down to the 90.10 to 91.05 range
Sterling has been the standout performer in 2021 and on Friday rose to $1.3987, an almost three-year high amid Britain’s aggressive vaccination programme.
Given the size of Britain’s vital services sector, analysts say the faster it can reopen the economy the better for the currency.
The dollar bought 105.46 yen, down 0.2% and a continued retreat from the five-month high of 106.225 reached Wednesday.
Many analysts expect the dollar to weaken over the course of the year as it has traditionally done during times of global economic recovery, though it might take some time to develop.
“It looks to me like there’s some exhaustion in that just-straight global reflation theme,” leading the dollar to trend largely sideways for now, said Daniel Been, head of FX at ANZ in Sydney.
(Additional reporting by Kevin Buckland in Tokyo; Editing by Hugh Lawson)
Bitcoin is ‘economic side show’ and poor hedge against stocks – JP Morgan
By Stanley White
TOKYO (Reuters) – Bitcoin is an “economic side show” and a poor hedge against a decline in equity prices, analysts at JP Morgan said in a sobering assessment that could undercut the cryptocurrency’s rise to record highs.
Current prices are well above JP Morgan’s estimates of fair value and the mainstream adoption of bitcoin increases its correlation with cyclical assets, which reduces the benefits of diversifying into bitcoin, the investment bank said in a memo.
Bitcoin, the most popular cryptocurrency, last traded at $51,116 on Friday, down from a record high of $52,640 reached on Wednesday. Rival cryptocurrency ether traded near a record of $1,951 reached earlier on Friday.
Bitcoin has surged by 45% so far this month, fuelled by signs it is winning acceptance among mainstream investors and companies, such as Tesla, Mastercard and BNY Mellon, but many observers remain sceptical of the unregulated and highly volatile digital asset.
“Crypto assets continue to rank as the poorest hedge for major drawdowns in equities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed,” analysts at JP Morgan said.
Some of bitcoin’s supporters argue that the cryptocurrency is “digital” gold that can hedge against inflation and declines in the dollar.
Based on that logic, bitcoin would need to rise to $146,000 in the long-term for its market capitalisation to equal total private-sector investment in gold via exchange-traded funds or bars and coins, according to JP Morgan.
Tesla’s chief executive Elon Musk said on Thursday that owning bitcoin was only a little better than holding cash. He also defended Tesla’s recent purchase of $1.5 billion of bitcoin, which re-ignited mainstream interest in the digital currency.
(Reporting by Stanley White; Editing by Sam Holmes)
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