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Bitcoin Price Charts — Technical Analysis Tips

Cex.io logoBitcoin is the most popular cryptocurrency in existence. After the initial release in 2009, this digital currency has exploded both in trading volume and usage. Bitcoin currently has a market cap of over $62 billion. To put this in perspective, the next widespread cryptocurrency is XRP with a total market value of just $13 billion. Moreover, Bitcoin currently has an average daily trading volume of $5 billion.

Regardless of the future of Bitcoin, it is well-known that trading this cryptocurrency may result in a lucrative venture. As with FOREX, you may find it possible to trade Bitcoin against other currencies. There is a plethora of platforms such as Kraken, Bitfinex and CEX. Using these platforms you may actively monitor variances in Bitcoin’s price, and trade to earn a profit. A hugely important aspect of Bitcoin trading is price chart analysis. To be successful one must be able to read these charts.

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Why Bitcoin Price Charts Are Important

Without Bitcoin charts, we cannot accurately asses price trends. To be a successful crypto trader, you must look at trends and recognize them. Trends are used to predict future fluctuations. They also give a key indicator of current market value and strength.

You cannot simply join a crypto exchange, buy some Bitcoin, and then sell it when the price is higher. In principle that works, but it’s a one-time profit. Serious traders have to make frequent trades to bring in a continual stream of income. This is why Bitcoin price charts are so important.

They allow you to see immediate peaks and troughs in the here and now. Moreover, they also allow you to look at long-term price trends.

Important Bitcoin Chart Analysis Features

To use technical analysis, you must understand the features of a Bitcoin price chart. This type of chart is known as a candlestick chart. Candlestick charts show the following:

  • Opening Bitcoin price
  • Closing Bitcoin price
  • The lowest Bitcoin price of a given timeframe
  • The highest Bitcoin price of a given timeframe
  • Difference between closing/opening price and which was higher

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Technical Bitcoin analysis revolves around using graphs and charts. You may explore both short-term and long-term trends, together with supply and demand, and the total volume of trading. In the following paragraphs we provide tips about different aspects of a Bitcoin graph price chart:

Total Volume of Trading

At any one time, a specific value of Bitcoin is actively traded. This is known as the trading volume. Trading volume helps identify trends. It also helps predict when a trend may change.

Strong trends (i.e. when the price sharply increases) are usually pushed by a large trading volume. On the flip side, weak trends (i.e. when the price only increases slowly), are usually pushed by a much smaller trading volume.

Aside from the volume/trend correlation, you must also look at how volume has changed over time. A lessening overall trading volume could indicate the currency is in decline. Furthermore, if the trading volume starts to decrease during an upward trend, this could indicate that the trend will soon end. Always look at trading volume!

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Trend Lines

Trend lines are your friend. Trend lines are the most basic aspect of trading charts. You should use this type of analysis tool frequently. A trend line is simply the overall direction that the currency is moving.

You must plot a trend line yourself – it will either be upward or downward. A downward trend means the price is decreasing. An upward trend means the price is increasing. There are also sideways trends – this is when the price is barely fluctuating.

Try to look at trend lines as often as possible. Also, consider that trends can be both long-term and short term. For example, you could see a downward trend over a period of a few hours, but over the period of a week, the overall trend could still be positive. Finally, always draw trend lines from the lower price indicators — this gives a more realistic overview of the price.

Moving Averages

Aside from trend lines, moving averages are also hugely important. A moving average looks at the price of Bitcoin over a set time period. For example, a moving average of today’s Bitcoin price would be calculated using the average price from the last 20 days. This gives an accurate overall measure and can be used in conjunction with trend lines and trading volume.

Resistance & Support Lines

Resistance and support lines help identify trends in supply and demand. Changes in supply and demand are important indicators when predicting price fluctuations and trends. The horizontal lines of a Bitcoin price chart show resistance and support.

  • Support: There is a large volume of traders who wish to buy Bitcoin at the current price (i.e. a large demand). This can often result in an overall price increase. Initially, the traders will buy Bitcoin in large volumes – as demand increases so will the price.
  • Resistance: There is a large volume of sellers waiting to sell their Bitcoin. This creates what is known as a supply zone. As more traders sell and the resistance level is approached, the overall price may decrease.

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To Sum It Up

General tips

  1. Don’t simply rely on a single factor: Consider the aspects such as supply, demand and price trends together;
  2. Look at both higher and lower time frame trends, i.e. hours, days, and weeks;
  3. Never overlook trading volume;
  4. Make use of automation tools and smartphone apps;
  5. Remain active: You cannot hope to profit by simply checking price charts once per week.

We hope you have found these tips useful. Understanding Bitcoin charts is imperative. If you wish to succeed as a trader, take time to learn how they work. Furthermore, consider looking at other crypto charts too. By cross-referencing Bitcoin against other currencies, you could broaden your trading options.

Don’t forget to utilize trading apps too — these can give you access to trading charts and live prices whilst you are on the go.

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