Updated: January, 2022
If you are a Bitcoin trader on Luno or any other platform, you will come across various charts. These charts are, line chart, candlestick chart and trade volume chart.
These charts go a long way in predicting price trends and hence, making a good buy/sell decisions.
I will go over the very basics of how to read different types of trading charts you will encounter when you are starting out with cryptocurrency trading on Luno and even any other platforms.
The Line Chart
A line chart is one of the most basic charts you will come across and it looks a lot like what you may remember from secondary school math! These charts show the simple progression of a coin over time represented by a line.
This is a line chart. The line moves from left to the right. It could be going upwards (increasing price) or it could be going downwards (decreasing price). Sometimes, it moves on a straight horizontal line (steady price).
Many times you will see line charts with line tracking the Bitcoin price and and a faded grey bar tracking trade volume. These linear graphs give you a good general idea of what the coin has done in price over time.
Related post: How I Make Money Daily On Luno By Trading On Bitcoin
Line chart shows you when the price is going up and when it is going down using simple line. When the line is going up (whether upright or slanted ), the Bitcoin price is on the increase. And that is the right time to buy.
The CandleStick Chart (Traders Choice)
The candlestick chart is a more advanced trading chart and is what you will see on most exchange sites out there such as Luno, etc. It shows things like price and volume with the zoom feature as well, but it also shows a lot more detail about the trading in any given period.
Red. Green. Grey.
A "candle" will display the opening price, the lowest and highest price of the selected time-period along with the price it closed at. The "wick" or the lines at the top and bottom indicate the lowest and highest prices during the selected time.
Trade volume Chart
Traded volume shows the amount of Bitcoin bought and sold over a given period of time, usually, 30min, 1hour or 1week, 1 month, 1 year. Luno uses faded grey coloured bars to indicate traded volume.
Trade volume plays an important role in identifying trends. Increase trading are accompanied by a high trading volume, while low trading are accompanied by a low trading volume. When the Bitcoin price goes down, it is advisable to check the volume which accompanied the decline.
A long-term trend of bitcoin price increase is accompanied by a high trading volume and a low volume of declines.
If the trading volume is decreasing, but bitcoin price is increasing, the upward trend of the bitcoin price is likely to come to an end in a short time.
So when you notice that the trade volume is high and the Bitcoin price is increasing, expect a decrease in Bitcoin price shortly and vice versa.
An important feature of almost any trading chart is the "zoom" feature. You zoom chart by using your two fingers to pinch the area of the screen and then, spread out wide. If you check another option like 1m (1 month) or 1w (1 week) we get the same type of graph but just zoom out to give us more detail. This is super helpful to see different trends for the coin quickly. As you can see the charts for 3m and 1 day look quick different, but they have all the same data.
Another useful feature of most charts is the ability to hover over the line chart and get the data for that given period. You can touch any area of the line chart to review more details.
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