Using tradingview charts to invest or trade digital assets like cryptocurrency gives you a profitable edge. It puts you ahead in the investment game if you learn how to forecast cryptocurrency price action using these charts.
After picking up your favourite cryptocurrency investment, it’s important to forecast the possible price action of the digital asset. An understanding of fundamentals combined with technical analysis lets you control anxiety in a highly volatile market.
Before taking you to the tradingview charts, I will explain the basics of technical trading by focusing on technical fundamentals. By the end of the post, you’ll be ready to take on the trading charts and start analysing them. Let’s understand the basics of technical trading –
- Introduction to Tradingview Charts
- Candle Structure
- Support & Resistance
- Uptrend vs Downtrend
- Timeframes
- Power Indicators
- Live Demo
1. Introduction to Tradingview Charts:
Tradingview is a well-known platform among traders and investors. The platform provides a wide range of charts with additional options of timeframes, indicators, drawings etc. for almost every trading asset on the planet. From stocks to cryptocurrency traders, everyone uses this platform.
Tradingview comes with multiple membership options from Basic to Premium. Basic is a free membership, you can create a free account and use all its features for a complete 1 month. The remaining options are for paid members that give additional access to charts and tools inside the platform. If you’re new to tradingview, I suggest opening a free account and then moving on with the upgrade version.
2. Candle Structure:
A candlestick in the chart is like a drop in the ocean. A single candle doesn’t indicate much but multiple candles created daily constitute the whole chart. Therefore, to understand the charting system, we have to understand the candle’s structure, how it is formed, and what it indicates.
In the chart shared above, you’ll see two candlesticks, one in green colour and the other in red colour. Depending upon the time frame, green candles indicate a profitable day or week while red candles indicate loss or fall in the value of the concerning asset. In short, green is a sign of a Bullish market and red is a sign of a Bear market. Candle Structure –
| Candle Indicator | Meaning |
|---|---|
| Daily Open | The price at which the candle opens for the day. |
| Daily Close | The price at which the candle closes for the day. |
| Daily High | The highest price value achieved for the day. |
| Daily Low | The lowest price value achieved for the day. |
| Body | The structure of the candle between daily open and daily close. |
3. Support & Resistance:
Support and resistance are the basics of any charting system including cryptocurrency trading. Without the knowledge of support or resistance, it’s impossible to draw a logical conclusion.
Support: A potential value area where the price action has a high tendency to bounce back, usually upwards. Example – solid ground.
If you threw a ball into the sky, for some time it will fly and then returns back to the surface. If the surface is hard enough, the ball will bounce back up. The ground in this example is equivalent to support where the price action bounces back up.
Resistance: A potential value area where the price action has a high tendency to bounce back, usually downwards. E.g – Roof.
If you throw a ball against the roof, once it hits the rooftop, it will return back to the surface after hitting it. The rooftop in this example is equivalent to resistance where the price action bounces back downwards.
4. Uptrend vs Downtrend:
A trend is defined as a pattern based on the latest price action. When it goes up, it’s called an Uptrend; when it goes down, it’s called a downtrend. A trend determines the future price action of the trading asset.
5. Timeframes:
Timeframes are the key time intervals to study, in order to analyse the charts. The most famous timeframes used by trading analysts are –
- Monthly
- Weekly
- Daily
- 4 Hours
- 1 Hour
- 5 minutes
A hardcore trader always prefers to analyse all the given timeframes before planning an entry while a long-term investor looks for the higher time frames ranging from 3 months to a daily timeframe.
Symbols to know:
— TradingView (@tradingview) August 26, 2022
TOTAL = Market cap of all cryptocurrencies combined
TOTAL2 = Market cap of all cryptocurrencies ex BTC
TOTAL3 = Market cap of all cryptocurrencies ex BTC & ETH
TOTALDEFI = Market cap of decentralized finance
OTHERS = Top cryptos excluded, all others included
6. Power Indicators:
The indicators help you predict the direction of the trade and help formulate important entry and exit strategies. The key indicators that I personally prefer to use –
- EMA – Exponential Moving Average
- MACD – Moving Average Convergence Divergence
- RSI – Relative Strength Index
- Fibonacci Retracement
I will explain these indicators when I take you through the live demo of the tradingview charts.
Watch the complete video on the basics of the charting system –
7. Live Demo of Tradingview charts:
The live demo is shared in part -2. Click the link shared below to access the post. Remember, practice makes humans perfect!
That’s about the basic understanding of the charting system. In the next post, I will take you through the live demo of tradingview charts and explain step-by-step, how you can build your own technical analysis from scratch. Do watch my section on cryptocurrency and remember to subscribe to the newsletter. Happy investing.
Paras is a blockchain writer & video creator at Katoch Tubes. In his free time, he loves watching space exploration documentaries & Hollywood movies.