Discover the main charts to trade cryptocurrencies
Learn About The Top Cryptocurrency Trading Charts
Don’t miss opportunities - find out what are the main charts to trade cryptocurrencies
·5 min read
The chart is one of the most classic representations of a given market. For traders, knowing the main cryptocurrency trading charts is an excellent step to finding the best opportunities to buy and sell these assets.
Today, there are several charting options, but which one is the best? In this article, you can check out specialized graphics to operate cryptocurrencies and know their advantages!
Candlestick chart: The Basics
Before we talk about the timeframe of the charts, it’s important to comment that the most used graphic type is the candlestick. This chart presents the market in the form of “chandeliers”. The candlestick chart is also known as the “Japanese chandelier” chart. Through it, market analysis occurs in bars that have the minimum, the maximum, the closing and opening of the asset.
It is one of the main cryptocurrency trading charts for easier interpretation: if the market is rising, the bars should show a positive color (usually represented by the green color, when the candle close is greater than the opening). When the market falls, the representation is negative (usually represented by the red color, when the candle close is smaller than its opening).
Now, how to form these candles? This answer is in time and timeless graphs.
Intraday Trading Time Charts
Time charts are some of the charts most commonly used by traders. In these graphs, the formation of a candle occurs every defined period of time. The shorter the time limit, the more candles will appear: a 1-minute chart, over 1 day, for example, represents 1440 candles. The 60-minute chart on a full-day is represented by 24 candles.
The lower the frequency, the narrower the interpretation of the market moment. Also, the higher the frequency, the greater the possibility of evaluating the market context. By taking the 1-minute chart as the basis, for example, the analysis for shorter operations, (where the market quickly breaks down small supports and resistances) makes sense. The same scalping operations on a larger time frame chart can be more difficult.
For instance, In a 60-minute chart, there’s a longer logic in the operation and typically tracks shares by days. In summary: there are multiple ways to use each chart. See the most common charts and their advantages!
The 1-minute chart is widely used for the analysis of small variations of a given cryptocurrency. Try using it in liquid cryptocurrencies that have higher volatility, because the trend is that if you use this chart in non-liquid cryptocurrencies, there’s a high risk of getting it wrong. With this chart, small moves can be seen, but not large moves. If you want to validate a larger movement, analyze a chart with higher periodicities.
For the 1-minute chart, the analysis of what is happening on the day of is very important: the formation of consolidation by time can be monitored. So, if the macro trend of a cryptoasset is trending high, it’s not the reason you’re going to buy it. The macro trend may be on the rise, but on intraday, the market is consolidated.
The 15-minute chart seeks to correct the small variations of the smaller charts. When you have an analysis on an extremely small time frame, depending on the operations performed, there are many false disruptions.
In trading, it’s understood that the longer the time chart, the greater the predominance of an indicator. In the 15-minute chart, you can better validate a movement compared to the 1-minute chart.
Thus, one can avoid common operational errors, such as entering a trend before the right time, entering the stop loss at an incorrect price, etc.
The 60-minute chart is widely used in trading. To operate cryptocurrencies, the method is similar to the traditional market. It’s considered an intermediate graph between the intraday charts and charts greater than 1 day.
Thus, the 60-minute chart reflects the market movement as a whole. It’s a decent operational reference for smaller graphics. At the same time, it can be used in comparison with longer-time charts, for swing-trade operations, among others.
On the 60-minute chart, trades tend to stretch on the day, and if the trader wishes to hold more of his position in the cryptocurrency, it’s an excellent reference for swing-trade operations.
In addition to time charts, some data-based charts are quite successful among cryptocurrency traders. Among them, two stand out: Renko Chart and Point Chart.
The Renko chart is one of the main cryptocurrency trading charts, being one of the best known among traders. It’s a timeless graph, which means it doesn’t use the time for its formation. The Renko chart shows the candles (in this case, bricks) all of the same sizes. Each brick can represent any price size and is based on the market variation, or Average True Range (ATR).
The advantage of the Renko chart is its graph formation; it allows you to track the reversals and price corrections of a cryptocurrency. Reversal is the origin of a movement: large reversal movements happen when there is a prevailing trend, and there’s a price reversal sufficient for that trend to end.
Therefore, the Renko chart shows bricks that suggest the exhaustion of the trend. If it isn’t really a reversal, it’s a suggestion that in that region, there’s a high possibility of correction.
You’ll also notice that in trends, unlike the time chart, the Renko chart tends to show the price path with fewer “noises”. Thus, it helps traders have an easier time keeping track of trends. Try out the periodicities in the cryptocurrencies you follow, such as 10R, 20R, among others.
Point & Figure Chart
Like Renko, the Point & Figure chart is another timeless chart that is based on cryptoasset market variations. However, there’s one striking difference: the point chart is widely used to see the large regions of the market fight.
In the Point & Figure chart, you can analyze consolidation moments and even large consolidation regions. This is for two reasons: operating in consolidation or (if only operating during bullish or bearish trends) not performing operations.
Typically, side-by-side candlesticks on the point chart show that the price of this cryptocurrency is in a battle between sellers and buyers. From then on, it’s possible to follow a consolidation output more clearly (because a price change is required for this to occur) and analyze the extreme points of the market fight.
In this article, we’ve covered charts widely used in cryptocurrency trading. Have you used these charts before? Comment below what charts you prefer!