Most crypto charts use candlesticks. Each candle shows four prices for a chosen time period: where the price opened, the highest and lowest points it reached, and where it closed. Green (or hollow) candles mean the price closed higher than it opened; red (or filled) candles mean it closed lower. Once you can read a single candle, the rest of the chart starts to make sense.
Key takeaways
- Each candlestick shows open, high, low and close (OHLC) for one period.
- Timeframe matters: a 1-hour chart and a weekly chart can tell very different stories.
- Volume, support/resistance and moving averages add context.
- Charts describe what happened — they don’t predict the future with certainty.
Anatomy of a candlestick
| Part | What it shows |
|---|---|
| Body | The range between the open and close price |
| Color | Green/hollow = close above open; red/filled = close below open |
| Upper wick (shadow) | The highest price reached during the period |
| Lower wick (shadow) | The lowest price reached during the period |
A long upper wick means buyers pushed the price up but sellers drove it back down before the close. A long lower wick shows the opposite: sellers pushed down, buyers stepped in.
Choosing a timeframe
Each candle can represent one minute, one hour, one day, one week or more. Short timeframes are noisy and mostly used by active traders. Long-term investors usually look at daily and weekly charts to see the bigger trend. A good habit: start with the weekly chart, then zoom in.
Volume
Volume bars, typically shown beneath the chart, show how much was traded in each period. Big moves on high volume suggest strong participation; moves on low volume may be less reliable. Note that reported volume differs between exchanges.
Trends, support and resistance
- Uptrend: a series of higher highs and higher lows.
- Downtrend: lower highs and lower lows.
- Support: a price area where buying has repeatedly stopped declines.
- Resistance: a price area where selling has repeatedly stopped rallies.
When resistance breaks, it often becomes support, and vice versa. Think of these as zones, not exact lines.
Common candlestick patterns
| Pattern | What it looks like | Often interpreted as |
|---|---|---|
| Doji | Tiny body, open ≈ close | Indecision |
| Hammer | Small body, long lower wick, after a decline | Possible bullish reversal |
| Shooting star | Small body, long upper wick, after a rally | Possible bearish reversal |
| Bullish engulfing | Green body fully covers the previous red body | Buyers taking control |
| Bearish engulfing | Red body fully covers the previous green body | Sellers taking control |
Patterns are probabilities, not promises. They work better when they appear at key support or resistance levels with confirming volume.
Two popular indicators
Moving averages
A moving average (MA) smooths price over a number of periods — for example, the 50-day and 200-day MAs. Price above a rising 200-day MA is often seen as a long-term uptrend. When the 50-day crosses above the 200-day, traders call it a «golden cross»; below is a «death cross».
RSI (Relative Strength Index)
RSI measures momentum on a 0–100 scale. Readings above 70 are often called «overbought» and below 30 «oversold». In strong trends, RSI can stay at extremes for a long time, so it’s not a standalone signal.
Beginner tips and limits
- Use charts to understand context, not to chase every move.
- Always define how much you’re willing to lose before entering a trade.
- Avoid leverage while learning — it magnifies losses as well as gains.
- Remember that news, regulation and liquidity can override any chart pattern.
- If you’re investing long-term, a simple plan like dollar-cost averaging may beat frequent trading.
Frequently asked questions
Does technical analysis work in crypto?
Many traders use it to manage entries, exits and risk, but evidence that chart patterns reliably predict prices is mixed. Treat it as one tool, not a crystal ball.
What is the best timeframe for beginners?
Daily and weekly charts filter out noise and are best for understanding the overall trend.
New to crypto? Start with how to buy cryptocurrency safely.
