How to read a crypto chart, without being an expert
A candlestick chart looks complicated, but it answers a few simple questions. This guide explains what each part means and what it cannot tell you.
- A candle shows what price did in one period: where it opened, closed, and how high and low it went.
- Start with the trend and the volume. Then check whether the price looks stretched.
- Indicators such as RSI and MACD describe the past. None of them predicts the future.
What one candle shows
Each candle covers one period of time. On a daily chart, one candle is one day. On a 1-hour chart, one candle is one hour.
A green candle means the price closed higher than it opened. A red candle means it closed lower. The thin lines (wicks) show how far the price travelled and then came back.
Pick a timeframe that matches you
The same coin can look rising on a daily chart and falling on a 15-minute chart. Both are true. Choose the timeframe that fits how long you plan to hold.
- Weeks or months: use the daily and weekly charts.
- Days: use the 4-hour and daily charts.
- Minutes or hours: short charts move fast and are noisy. Beginners are usually better off with longer timeframes.
Trend: is price going up, down or nowhere?
A moving average is the average price over the last number of candles, drawn as a smooth line. A 20-candle average reacts quickly. A 50-candle average reacts slowly.
- Price above both lines, with the fast line above the slow line, is an uptrend.
- Price below both, with the fast line below the slow line, is a downtrend.
- Lines tangled together with price weaving through them means no clear trend.
- A dip below the fast line while still above the slow line is a pullback inside an uptrend.
Volume: how many people took part
Volume is the amount traded in each period. A big move on high volume means many traders agreed on the price. A big move on very low volume is easier to reverse. Volume figures differ between exchanges, so treat them as a rough guide.
RSI: has the move gone too far?
The Relative Strength Index turns recent price changes into a number from 0 to 100.
- Above 70 usually means a hot run: buyers may be getting tired.
- Below 30 usually means heavy selling.
- Around 50 means neither side is extreme.
RSI can stay above 70 for a long time in a strong uptrend, so it is a warning light, not a sell button.
MACD: is momentum speeding up or slowing down?
MACD compares a fast and a slow average and shows the gap as bars. Bars above the zero line mean upward momentum. Bars shrinking toward zero mean that momentum is fading, even if the price is still rising.
Bollinger Bands: what is a normal range?
The bands wrap around price and widen when the coin is moving a lot, narrow when it is quiet. Price near the top band is stretched compared with its recent behaviour. Narrow bands mean a quiet spell, and quiet spells often end in a bigger move, but the bands do not say which direction.
Support and resistance: recent highs and lows
Prices often react near levels where they previously turned. A recent low where buyers stepped in is called support. A recent high where sellers appeared is resistance. These are not walls. They are places to pay attention, and they break regularly.
A simple five-step routine
- Choose the timeframe that matches how long you plan to hold.
- Check the trend: up, down or unclear?
- Check whether the price looks stretched (RSI, distance from the averages, top of the bands).
- Look at the volume behind the recent move.
- Decide where you would be wrong (your stop) before you decide how much to buy.
Common mistakes
- Relying on one indicator. Indicators often disagree, and that is information.
- Staring at 1-minute charts. Short timeframes are mostly noise.
- Treating RSI above 70 as a guaranteed sell, or below 30 as a guaranteed buy.
- Drawing lines after the fact. Patterns look obvious looking back.
- Ignoring fees, slippage and the stop-loss distance.
See every indicator in this guide for any coin, with a plain-English reading and a Buy, Sell or Hold vote on each timeframe.