Perhaps you may be wondering what the fuss is all about cryptocurrency and how you can interpret and effectively invest in the crypto market.

Well, the financial market is gradually leaning towards the digital space, with cryptocurrency at the apex as the most preferred investment arena. Investors are shifting attention towards the crypto market as the future of investment, especially after the COVID-19 pandemic. Ideally, the pandemic has pushed to the walls of the traditional financial market, crippling companies and investors alike and causing inflation.

Much of the interest in crypto emanates from its unregulated operations, including the trade for-profits, where speculators often drive-up prices. Bitcoin, the most popular crypto, has experienced price volatility in the recent past, hitting as high as $65,000 in April before plummeting to almost half its value in May. Some investors also prefer the decentralized system of crypto, especially the blockchain technology that guarantees its security.

As investors and potential traders flock to the crypto space due to the enormous benefits, your interpretation of crypto is likely to give you a cutting edge. Indeed, many traders struggle to understand crypto, thereby ending up incurring losses from their investments. Several crypto companies offer consultancy services to traders and potential traders on crypto assets to help them remain afloat and profitable in the highly volatile digital market.

VRM is a notable platform that offers research-based content for our customers about the latest crypto news and trading. Under VRM Research, we provide comprehensive content covering professional analysis of digital assets and insights from the heart of high-end trading. Our technical and fundamental analysis and crypto market forecast helps you understand the market and make informed investment decisions.

Reading the Crypto Charts

Many traders have a major challenge in trading in crypto, especially with timing. You need to understand the market trend to decide when to enter or exit accurately. You may have a clear understanding of crypto trading and believe that the price of a certain crypto asset is about to go up, but you will likely lose money when you choose a wrong entry or exit point. Therefore, crypto charts will guide you appropriately in understanding the crypto, including price and market trends. In addition to the technical analysis, your understanding of the crypto charts will help you succeed in the crypto business.

There are several ways to read crypto charts, key among them is the candlestick chart.

The candlestick chart comprises three main elements, including time, volume, and bullish and bearish candlesticks.

Timing

Time selection is a crucial aspect of crypto trading. As an investor, crypto charts allow you to select the time frame you want the candlestick to cover. This time frame will encompass all the crypto transactions that occurred and shown on the crypto candlestick. Depending on your favorite cryptocurrency time frame, each candle will represent the duration you have chosen. For instance, if you select a 10-minute chart, each candle will represent 10 minutes.

Timing guides investors on when to enter or exit crypto trading. Choosing the right time to buy or sell a crypto asset remains the most crucial aspect in crypto trading and determines your success or otherwise.

Volume

Volume is another critical element of candlestick and guide to understanding the crypto market trends. Volume often increases during an uptrend in price and reduces as prices decline. A cryptocurrency chart entails the volume of trade, which includes the trading activity within a specified timeframe. Longer volume bars depict more buying/selling pressure in the crypto market. A red volume bar demonstrates a decline in the interest in the crypto asset and selling pressure.

Bearish and Bullish Candlesticks

Bearish and Bullish are common terms, referring to a downward trend and upward trend, respectively. Bearish implies a decline in prices, while bullish is an upward trend referring to increasing prices.

 

Green candles are used by default to represent bullish candlesticks, which shows an increase in the price within the stipulated time frame. For instance, if the opening price of a 10-minute candle is lower than the closing price, that’s a bullish candlestick. The top section represents the closing price in this candlestick, while the thick bottom part represents the opening price.

The wicks represent the lowest and highest prices within the chosen timeframe. Candlesticks come in varieties of shapes and forms, and their price formations can be used effectively to predict market trends in the future. Combinations of candlesticks, also known as chart patterns, are essential in predicting market behavior and are useful for you as a trader in making your crypto investment decisions.

Technical Analysis

In addition to Crypto charts, technical analysis has effectively shed light on the otherwise technical crypto terms and operations.

Technical analysis uses the crypto market trends and patterns of price movements to predict future price movements. It observes price patterns, trading signals, among other analytical tools, to ascertain the position of a crypto asset in terms of its strengths and weaknesses.

At VRM, we conduct technical analysis for our clients and potential customers and provide the latest market news updates, professional analysis, and market insights. Such credible information will guide you to understand crypto and make wise investment decisions.

As an investor, understanding the crypto and the market trends enables you to predict the entry or exit points accurately.

Technical analysis assumes that:

  • The price and trade volume patterns collected in the past can paint a reliable picture of the future market trends.
  • The data on crypto prices will provide reliable information on a company’s performance.
  • Price trends create a pattern of movement on charts

The technical analysis revolves around the price and volume charts, informing the investor on when or whether to buy or sell a crypto asset. Various aspects of technical analysis can help you make sound investment decisions in the crypto market, including support and resistance, market trends, and emotional risk.

Support and Resistance

Support and resistance indicators inform you on when to enter or exit the crypto trading. Support acts as an entry point, while resistance is used as an exit point. Prices can swing between resistance and support level without stopping, particularly during strong trends. In doing so, an investor must predict when to enter or exit the market while remaining afloat and profitable.

Relative Strength Index

Relative strength index (RSI) is an aspect of technical analysis, which compares the past performance of a crypto market’s price and the current price to establish its speed and strength. To ascertain whether a crypto asset is oversold or overbought, the index compares the magnitude of the recent losses with recent gains using the following formula:

RSI = 100 – (100/(1-RS))

Here, RS is the ratio between the average of the days the coin was up to the average of the days the coin was down. To understand the RSI from the crypto perspective, you need to understand a few issues. First, the RSI ranges from 0 to 100. Secondly, when a given coin approaches or exceeds 70, then is termed as overbought. The implication is that the asset is getting overvalued; therefore, its value will soon decline. On the other hand, when the RSI approaches 30, the crypto is undervalued, and soon, its value may rise. Such information helps you as an investor to make wise trading moves in the crypto market.

Interpreting crypto may prove complex and technical to investors, especially newcomers. VRM focuses on providing accurate predictions in the crypto space, backed by professional analysis and credible market insights. We work consistently to provide high-quality trading signals that help you as a trader make informed trading decisions.

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At VRM Research, we provide regular investment analysis of the cryptocurrency markets in cooperation with our trading department. Check it out and don’t miss the newest trends and developments in the crypto space.