Ethereum is the talk of the crypto space right now, even outperforming Bitcoin and much of the rest of the market by a wide margin. Ethereum price is skyrocketing, reaching as high as $4,000, and is still climbing sharply by the day.
Newcomers are flocking to crypto by the droves, and the rising interest and demand are driving up prices faster than anyone can keep up with. Keeping track of prices is just one piece of the puzzle that is technical analysis and is the stepping stone to learning more about markets and what to expect from them.
Using powerfully trending Ethereum as an example, we’re going to walk you through how to read a price chart and explain all of the information it can provide.
Green Versus Red: What Are Japanese Candlesticks
Even if you are new to crypto, chances are that you’ve spent some time searching social media, Reddit, or even Google for information regarding your favorite coins. Twitter is filled with laser-eye profile pics representing their love for Bitcoin. Ethereum users tend to be more focused on things like DeFi or NFTs.
Whatever the community is chatting about, frequently, users will share price charts with either candlesticks or squiggly lines on them, which are aptly named line charts. Those “candlesticks” we mentioned aren’t for a day at the spa – instead, they’re an essential indicator that provides information on open, high, low, and close.
The shapes and sequences in which these candles form can provide a wealth of data about what’s potentially to come in the days ahead. For example, suppose Ethereum bulls close a daily with a massive green candle that fully engulfs the previous red candle. In that case, there’s a higher probability that the price action could soon reverse.
Depending on the timeframe, the signal can be weaker or stronger. The shorter the timeframe, expect the reaction to be smaller when the pattern resolves. Across high timeframes, there’s a potential to spot a trend-changing move.
Technical Indicators Improves Probabilities Of Profit
Below, or often layered on top of price action, are what are called technical indicators and oscillators. Oscillators refer to any tool that measures data between two extremes, while indicators are far more complex. Oscillators, for example, can signal when assets are oversold or overbought.
Indicators can have many visual attributes to them, such as the Bollinger Bands, which consist of a simple moving average and two standard deviations of the moving average acting as the upper and lower “bands.”
Some of the most popular technical indicators used in crypto and Ethereum are the MACD, Relative Strength Index, Average Directional Index, Ichimoku, and more. All of these indicators are available on PrimeXBT, built directly into the on-platform charting software.
Charting Your Way To Success With Built-In Tools At PrimeXBT
Relying on these indicators in combination with Japanese candlesticks and price patterns can further improve probabilities and lower risk. Chart patterns in geometrical shapes also have a hit rate and measure rule that can be applied to produce some expected results. These results aren’t always conclusive, but it is certainly better than simply guessing when or at what price to enter or exit a position.
Price charts are also how traders understand where support and resistance lie, which would be exactly where positions should be opened or closed. The goal of any trader is to long support and buy resistance, placing stop losses below or above the defined level for risk management. How much capital to apply is always based on risk appetite and how much money you can comfortably afford to lose.
Finally, each chart typically has some additional information at the top, related to the exchange or trading platform, the timeframe chosen – such as one day, one week, etc. – and what the trading pair is and recently traded at.
Ticker symbols represent each asset in a trading pair, or in the case of Ethereum is ETH. ETH typically trades against both USD and BTC. Both pairs are included on PrimeXBT, an award-winning multi-asset cryptocurrency trading platform offering more than 50 different trading instruments under one roof.
The massive lineup of assets consists of the likes of Ethereum, Bitcoin, forex, gold, oil, and more. Using BTC, ETH, or stablecoin-based margin accounts, traders can go long or short the market at any time, using very little starting capital with PrimeXBT.
Moreover, the charting software at PrimeXBT is provided by TradingView – the industry gold standard for price prediction tools, indicators, and much more. It also leaves one less reason behind leaving PrimeXBT’s one-stop-shop trading platform.