If you’re getting into crypto and want to learn your way around a chart, get ready to take notes. While assessing a chart is not complicated, getting to know the various elements and what they mean takes time. To read a chart correctly, you need to understand market trends and their behaviors.
Indeed, there is a lot to become familiar with, including the chart tenets, the phases, and how trends are confirmed. Knowing the tenets of market trends makes assessing and recognizing market trend patterns much easier. It might sound like a lot, but take it in bite-size pieces, and you’ll get the hang of it.
However, to help make things easier, we’ve provided you with a breakdown of how to properly read a crypto chart. Using this information, you can apply what you learn and make smart investment decisions. To get started reading a crypto chart properly, apply the information below when you’re on Coin Watch.
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Understanding Market Trends
Market trends contain signals that identify the primary market trend. Once this is determined, use the primary market trend to make the best trading decisions. When you recognize the patterns causing crypto markets to move, you can better predict market behavior.
Here are six principles you need to know:
- There are three movements in the market.
- The primary trends have three phases.
- New information is added once it’s accessible.
- All trend averages have to confirm one another.
- Trends are confirmed via volume.
- Trends are present until it is indicated that they have ended.
Make sure to research on your own to learn more about these six tenets and gain insight into reading a crypto chart. Look into the Dow Theory for specifics that can help you learn.
Market Phases In Crypto Charts
- The primary movement is the major trend taking place in the market. This trend typically lasts from one to multiple years.
- The secondary action is the “medium swing.” This concerns the moves that can be made in a medium timeframe (ten days to three months at a time).
- The primary price change measures the medium swing trends.
- Lastly, short swings are minor movements in the market, which consist of short-term considerations in the market.
More specifically, every three phases can be broken down as follows:
- The accumulation phase occurs when investors begin purchasing or selling a coin despite the overall view of the market.
- The participation phase is when the public takes note of the recent changes and acts according to knowledgeable investors. The public begins to follow suit.
- The distribution phase occurs when the participation phase ends, and investors start redistributing holdings into the market. The speculation around the prior phase ends here.
Gather as much info as you can.
Remember the rules mentioned above as you practice reading a crypto chart, and know that eventually, you’ll get the flow of things. Research more about the six tenets to gather as much insight as possible to make reading a crypto chart easier for you.