Reading and interpretation of cryptocurrency trading volume charts

As the popularity of cryptocurrencies continues to grow, traders and investors are increasingly using on -line platforms and tools to monitor market trends and make informed decisions. A crucial aspect of cryptocurrency negotiation is to understand how to read and interpret trading volume charts. In this article, we will divide the basics of cryptocurrency trading volume charts and provide tips on how to effectively analyze these graphs.

What is negotiation volume?

The volume of negotiations refers to the total number of negotiations that occur in a certain period of time, usually measured in units such as dollars or coins. It is an essential metric for traders to understand market dynamics as it indicates the level of interest and activity in a specific cryptocurrency. In other words, the negotiation volume is a liquidity and demand indicator.

How to read negotiation volume charts

To read and effectively interpret negotiation volume charts, follow these steps:

• Understand the type of chart : Different types of graphics have different characteristics that indicate various market conditions. For example:

* Line line: focuses on price movements over time.

* Bar chart: Displays closing prices for each bar.

* Candle Chart: Shows the highest and highest prices, as well as open and closed prices for each day.

• Identify trading volumes : Look for changes in the volume of negotiation that may indicate significant market activities. For example:

* Increased or diminished volumes may indicate a change at the time of price.

* Increased volumes or fall over time can signal an imminent increase or decline.

• Analyze the context of the graph : Consider the following factors by interpreting negotiation volume charts:

* Deadline: The negotiation volume varies greatly, depending on the time period. Short -term negotiations usually have high volumes, while long -term negotiations may have lower volumes.

* Market conditions: Economic indicators such as GDP, inflation rates and interest rates can affect negotiation volumes.

* Liquidity levels: High liquidity (high volume) or low liquidity (low volume) may affect market dynamics.

• Look for standards : Identify recurring standards on the graph that can signal a potential trend or escape. For example:

* A consistent increase in trading volume after an initial retraction may indicate a strong high trend.

* A drop in trading volume after an increase may suggest a correction or reversal.

Common standards to watch

1.

• Falling Tides : Diminated negotiation volumes may indicate sales pressure or potential collapse.

• Candle patterns : Certain candle patterns, such as the hammer or shot star, can signal reversal or escapes.

4.

Interpreting negotiation volume charts

To make informed decisions, use the following criteria when interpreting negotiation volume charts:

• Volume on price

  : When the price moves above the average moving average of 20 periods and the negotiation volume increases significantly, it may indicate a possible escape.

• Volume Momentum : If volumes are increasing in conjunction with price movements (eg ascension or coming down) but still show some volatility, it may suggest a change in intermediate trend.

• Trading volume trends : Look for consistent trends in the negotiation volume that can guide your decision making.

Conclusion

Reading and interpretation of graphic negotiation volume is a crucial ability for traders to dominate by investing in cryptocurrencies.

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