Understanding Bitcoin Price Chart

Understanding Bitcoin Price Chart

Blockchain 101
August 20, 2018 Editor's Desk
172
The crypto frenzy has taken over the world. On the face of it, it seems as if the cryptocurrencies world offers a “Get Rich Quick” scheme. However, it is more often a “Get Stress Quick” scheme until and unless you follow the right strategies. The market is definitely volatile, but the volatility of bitcoin is
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The crypto frenzy has taken over the world. On the face of it, it seems as if the cryptocurrencies world offers a “Get Rich Quick” scheme. However, it is more often a “Get Stress Quick” scheme until and unless you follow the right strategies.

The market is definitely volatile, but the volatility of bitcoin is going down slowly. Traders who enter the market to make a quick buck lose a lot of money more often than not.

Understanding the technical terms and the charts may seem daunting but we have covered the basics to get you started.

First of all, you’d want to know the current price of Bitcoin, which can easily be done at an exchange of your choice such as Coinbase, BitStamp, Binance etc.

The present is clear to you, and now to move on to the future, i.e. predicting price trends. You would need to opt for one of two methods – Fundamental Analysis and Technical Analysis.

The fundamental analysis, as the name sounds, digs deep into the fundamentals of the currency and determining why the price is behaving a particular way. It includes looking at the underlying forces of the economy along with other factors to determine the price of a commodity, currency or stock. Hence, they calculate the ‘true’ worth of the asset through their analysis and then trader accordingly.

The proponents of technical analysis believe that all the information gathered by the fundamental analysts is already factored into the price of the asset. Which means that the price estimation done by the fundamental analysts has already been done and applied. Thus, their core belief is that the ‘true’ worth of an asset is its price on the market. Hence they make their decisions on the basis of spotting market trends through historical data.

Now that you are aware of the two trading methods, let us zoom on the charts which can be of different types such as Line charts, Bar Charts, Candlestick charts etc.

The line chart is the simplest chart that you can find out there. It shows the price movement at a given point in time and is mostly used by traders to take an overview of how the market is performing. It is clear and concise as it shows only one thing but it compromises on the crucial details a trader needs in order to effectively make decisions.

The next type of chart which is arguably the most popular one among traders is the candlestick chart.

Each candle in the candlestick chart shows highs and lows along with the opening and closing prices for a particular period of time. You can select various options while viewing a candlestick chart to see the price changes within a 5-minute window, 10-minute window, hourly window and so on.

There are two types of candles – Bullish and Bearish. The bullish candles are green in color whereas the bearish candles are red in color.

The ‘body’ of the bullish candle starts from the opening price below and rises up to the closing price. Conversely, the bearish candle starts from the opening price and fall down to the closing price.

In addition to the candle bodies, there are lines going upward and downward showing you the highs and lows during that period. In both the cases, the upper line shows the high and the lower line shows the lows.

The candlestick chart, as you can see, provides much deeper insights into the market and gives adequate opportunities to the trader to spot trends and make a decision to buy or sell accordingly.

This gives you ample introduction to now go and do your own research and get into the subject more deeply to formulate your strategies and start trading.

 

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