1. Start by understanding the different types of charts – Line Chart, Candlestick Chart and Bar Chart. Each type of chart provides a different visual representation of the price action of a particular cryptocurrency.
2. Identify the cryptocurrency’s trading range. This could be days, weeks, or even months depending on the time frame of the chart.
3. Map out support and resistance levels. Look for areas where the price has previously had difficulty crossing, as these can be used to identify potential entry and exit points.
4. Pay attention to volume and momentum. High volume and sudden spikes during sustained trends is a good indicator of strong and healthy momentum.
5. Analyze key events. Cryptocurrency is a highly news-driven market, so try to identify market-moving news and see how it impacts the price of the coin.
6. Set risk parameters. Before entering a position, determine your risk tolerance, so you can adjust your position size accordingly.