How to Read a Crypto Price Chart

Price charts are the most visible thing in crypto and the most misused. Here is what they actually show.

The candles

Each candle covers a period: a minute, an hour, a day, depending on the setting.

The body spans the opening and closing price for that period. Coloured one way if it closed higher, the other way if it closed lower.

The wicks above and below show the highest and lowest prices reached during the period.

So a candle with a small body and long wicks means the price moved a long way in both directions and ended near where it started.

The volume bars

Usually below the price. They show how much was traded in each period.

Volume is useful context. A large price move on low volume involved few participants. The same move on high volume involved many.

Be aware that volume figures from aggregators have historically included fabricated activity from smaller venues. Volume reported by a single regulated exchange is more reliable than a combined total.

The timeframe matters enormously

The same asset looks like a catastrophe on a one-hour chart and a steady rise on a five-year chart, or the reverse.

Before reacting to a chart, check what period it covers. A great deal of commentary uses short timeframes to make ordinary volatility look dramatic.

What people draw on top

Trend lines, support and resistance. Lines connecting previous highs or lows. These describe where the price has been. Whether they predict where it goes is contested, and the lines are drawn after the fact by a person choosing which points to connect.

Indicators. Calculations derived from price and volume. They are transformations of the same data, not new information.

Patterns. Shapes with names. Humans are very good at finding patterns in random data, which is the difficulty with this entire category.

None of this is necessarily worthless and none of it is evidence in the way a fee schedule or a supply figure is evidence.

What a chart is genuinely useful for

Seeing the range. How much this asset has moved historically, which tells you what to expect.

Checking scale. Whether today’s move is large or ordinary by historical standards. Usually it is ordinary.

Nothing else, for a long-term holder.

The practical advice

If you are buying on a schedule, you do not need a chart at all. The whole point of a schedule is that the price on the day is not a factor.

If you are looking at one anyway, use a multi-year timeframe. It is the view that puts any given day in proportion, and it is the one nobody uses.