Understanding a Chart

When looking at a chart there are different things to look at to be able to understand what it’s really showing you and what it really means.

When you go to a specific cryptocurrency and pull up its chart you’ll notice that the bottom axis almost all the time is based on time and the side axis is based on price and where the price is at right now and where it was previously.
Now when you take a look at a candlestick chart the candlesticks represent the fluctuation of the market price in a given period of time. There are two different colours of the candlesticks usually red and green. Now a candlestick represents a certain amount of time. It can be a 1 minute time frame, a 5 minute time frame, a 15 minute, an hourly, a 4hr, a daily, weekly, or even a monthly. This means that let’s say we’re looking at the daily time 

frame; the candlestick shows the price fluctuation of a certain cryptocurrency that day only.

If it is a green candle that means there was a positive outcome in the market that day meaning that the market was going up
If it is a red candle that means there was a negative outcome in the market that day meaning that the market was going down.

Now if we look at smaller time frames like the 15-minute time frame for example, that means that each candlestick will represent where price fluctuated and closed every 15 minutes.

Volatility inside of the market represents how large an assets price swings. So for example you have 2 different types of market conditions. The first type of market condition is when the market is moving sideways where you are able to identify clear levels of resistance and clear levels of support, however the difference between the low and the high of price really isn’t all that great. Price is consolidating meaning price is stagnant in a specific area.

Now the other type of market condition is where there is a clear direction. The market will show us signs where it will want to expand in one direction following consolidation and even though we will see minor retracements there is a very clear trend and more often than not the market volatility will also increase hence the market has made a decision on which way the market is going to be moving.

If we take a look at any cryptocurrency chart and if we pay attention to some of these candlesticks, what we’ll come to find is that the market volatility, how much price moves, at any given day is often far greater than what we might see on something like the EUR/USD (a typical foreign exchange pair).

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