How to Read Crypto Charts?

Reading a crypto chart is quintessential for both newbies and experienced traders of the crypto world. Crypto charts are used to help crypto traders make better investment and trading decisions when dealing with cryptos. They are similar to other technical charts that help traders pick equity. But for the uninitiated, crypto charts are graphical representations of the price, volume, and time intervals with respect to the crypto market. But do you know how to read a crypto chart like a pro? Let’s get started with the basics, then. 

Dow Theory: The Foundation of Technical Analysis

Before we start with how to read a crypto chart, it is inevitable for every trader to know the Dow theory. Charles Dow pioneered technical analysis. He co-founded Dow Jones & Company. He was also the founder and editor of the Wall Street Journal. Dow’s ideas were developed in a series of Wall Street Journal editorials. Following his death, other editors, such as William Hamilton, refined these ideas and assembled what is now known as the Dow theory from his editorials. The Dow theory can be called a framework for technical analysis. It enumerates 6 fundamental tenets. Dow’s tenets can be considered the preamble for traders trying to identify and follow a crypto trend.

1. The market reflects everything

The Dow theory is based on the hypothesis of efficient markets (EMH). It claims that asset prices reflect all available information and trade on crypto or stock exchanges at their fair value. In other words, this strategy is the polar opposite of behavioral economics. For example, if an organisation’s earnings are widely expected to improve, the market will reflect the potential improvements even before it occurs. Demand for the company shares will increase prior to the release of the improvement report. Also, the price may not change significantly after the expected positive report is released.