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Have you heard the word crypto market? Or are you curious about how the crypto market operates? Well, you are in the right hands.
Cryptocurrency is one of the known virtual currencies in this era. It is a virtual currency that uses cryptography to protect its transactions. It uses a decentralized mechanism to track transactions. Also, it creates units rather than having a central body to regulate them.
Today, different investors such as Elon Musk, Michale Saylor, Barry Silbert, and others, buy cryptocurrencies like Bitcoin (BTC), Litecoin, Ethereum, Ripple, and others. They wait for their values to increase so that they will be able to sell it for a profit.
Currently, there are a lot of countries that adopt cryptocurrency. Examples are Vietnam, the Philippines, the USA, Ukraine, and India. , one of the countries that also adopts and uses cryptocurrency in Europe. In fact, they have their own BTC live in Euro where you can watch how Bitcoin changes its price over time. This is one of the things you can do to observe the changes and lapses in the crypto world.
The Crypto market can overwhelm beginners like you. It provides a lot of unfamiliar information about the trading sector. Thus, different websites provide price forecasts and charts, and also detailed graphs. These visual aids can help you in analyzing the crypto market’s behavior.
By this, what you need is a background in technical analysis.
What Is a Technical Analysis?
Technical analysis is when you attempt to map forward real-world data. In the market, predicting data is one of the fundamental skills you should have. Because the best-case scenario is when you are able to predict whether the market is going up or down. By this, you will be able to make a profit once you buy crypto money at a low price while selling it when it is high.
It will help you in analyzing price graphs and charts in many ways. It will also enable you to find consensus within the data to assist you in making predictions in the market. Thus, this article will give you one of the basic chart elements you will be encountering. It will also help you in knowing how it functions, what it tells you, and how these elements interact.
Knowing the Candlestick
Once you start watching bitcoin in real-time, there will be these rectangle-shaped objects. These rectangles are either green or red/pink and have bottom and top lines. This is what they call the candlestick, so what does a candlestick mean?
Also, these rectangles have two different colors which are red and green. It displays the difference between the beginning balance and the closing balance. Now, if you see that the rectangles are green then it indicates that your coin’s value has risen that day. If the rectangle is green, you can see the opening price at the bottom of the rectangle and the closing price at the top. But, if it’s red and the opening price is at the top and the closing price is at the bottom then your coin depreciates.
This pertains to the numbers that you can see at the top and bottom of the rectangles. This represents the highest and lowest prices of your coin on a particular day. For example, a coin value may have an opening price of a dollar (US$1) and close with four dollars (US$4). But, in the middle of that opening and closing, there’s a chance that it went down as low as 40 cents and as high as seven USD (US$7). The wicks can show the volatility of the crypto market within a day, and not only the opening and closing prices.
What Is the Volume?
When examining pricing graphs, another statistic is the volume. There are two different volume categories to think about. These two types are the dollar volume for a certain period and the literal volume of sales, which is the number of coins that were exchanged during the period you are looking at (daily, weekly, monthly, etc.).
Volume is crucial because it conveys the severity of the sales or buys of the market. The price will be more volatile the more trading there is going on. Because it gives them the chance to get at a discount and sell at a premium, traders enjoy volatility.
There is real momentum in price fluctuation if the number of trades is big and the price is rising. So, if you were considering selling your coin, you might want to wait. This is with the hope that the upward trend would continue. But, if general transaction volume is low, it could show a lack of confidence in the market. This makes any price change—upward or downward—less likely to persist into the next session.
The second form of volume is the dollar volume over a certain period of time. You can solve it by multiplying the coin’s price by the volume exchanged. This enables us to contrast coins of various values.
The Price Movements
It’s risky to only take into account volume and candlestick trends over short time frames. Even though they are essential for projecting price moves you should also be aware of one thing. To avoid being duped by the market into selling or purchasing at the incorrect time, you should also consider price changes over a longer period of time (days, weeks, months, etc.). The moving average is useful in this situation.
There are two types of moving in cryptocurrency. The simple moving average (SMA) shows the average closing price for a specific time. The SMA removes all the fluctuation within a day and provides a clear view of the market and shows trends over time. The other type is the exponential moving average (EMA). Based on its closeness to the present day, the EMA graph gives each day a distinct weight. It gives the prior day a greater value today than yesterday. While also, with each day’s significance decreasing. The EMA reacts more quickly to market unpredictability and may adjust more quickly.
How to Do an Efficient Trade
Now that you’ve gained the basic knowledge, you can start examining larger-scale trends. The wicks on the ends of our candlesticks serve as the best example of this. A price graph can show the lowest candlestick wick for a certain period of time. This demonstrates the lowest price at which the coin was traded during that time.
When you trade with the trend, you buy when the market is rising and sell when it is falling. For those aiming for longer-term profits with their coin purchases, this is the main goal.
Trading in crypto markets is one example of taking risks. Thus, you should always have a person who can guide you and can explain to you the very details of crypto markets. Also, you should always be ready for the unpredictability of bitcoin cash (BCH). BCH’s suitability for your investment will depend on your risk-taking skills. It also includes your personal financial situation and investment objectives.