Whether new to Crypto or a self proclaimed Guru, you should be able to read basic Chart structure.
Especially if you plan to be successful in this industry. It’s really not as complicated as it looks and here is why….
The first look at any market data chart is enough to make anyone’s head spin. However, it’s really not as complicated as it looks. A few key factors to consider are SUPPORT, RESISTANCE, HIGHS, LOWS and the TREND. With just these tools you could already be a great trader.
In the picture below you can see some horizontal lines in red, these are what we call SUPPORT & RESISTANCE lines. Generally anything under the current price should be GREEN to show SUPPORT and anything above the current price should be RED to show RESISTANCE. These lines go way back through the life cycle and line up as best as the eye can see. With just these in place almost anybody can make an educated guess on the markets next move.
The GREEN & PURPLE diagonal lines represent and upward channel, this is quite easy to mark out and follow. You can see at the top it popped out of thechannel and held, this could be a buy. Once it hit the RESISTANCE above and was REJECTED you would than sell. You can see afterward price moved sharply back into the channel and though the bottom where it closed below the channel. This would indicate a large sell in most cases.
At this point you would hold the sell position until a SUPPORT zone has been reached and held. As seen above the price fell through two levels of possible SUPPORT and held at the third level. Generally if the price stops with a good rebound and closes above the SUPPORT line you can begin monitoring for a good BUY position and let go of the SELL for a big profit.
At this point we made DIAGONAL TREND LINES running along the wicks at the top down to the top of the HIGH at the bottom, same for the underneath, draw a DIAGONAL TREND LINE that follows from the lowest previous LOW and run it up to the highest LOW in the new TREND.
As seen at the end of this diagram and the current market, Bitcoin has made some bullish moves and gotten above RESISTANCE to enable the RESISTANCE to become SUPPORT now having closed above.
Chances are we would have missed the first touch and bounce unless we had a BUY order in place, but that’s a whole next level. When starting out you want to be on these charts and monitoring as much as possible. Mark it up, follow and see if your predictions came true or proved false. Keep tuning your skills until every movement can be seen coming. You will not win 100% of the trades you take, sometimes the markets will move funny, sometimes news comes out and can shift things. All these reasons make it imperative that you never risk more than you are willing to lose.
Many small wins can add up just as fast as one big one if you are careful and methodical in your trading. Never rush or jump into something for fear of missing out, this will only hurt your account.
If you want to learn how to trade or at least read a chart, don’t hesitate to reach out 🙂
Hope your week is off to a great start!
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