Analyze Cryptocurrency
Learn Trading Concepts
Expand your knowledge with these key trading concepts
Support is a price level where a downtrend can be expected to pause due to a concentration of demand. As the price drops, demand increases, forming the support line.
Resistance is a price level where a rising trend can be expected to pause due to a concentration of selling interest. As the price rises toward resistance, sellers become more willing to sell.
These levels are identified by looking at historical price action where the price has repeatedly bounced or reversed. The more times a level is tested, the stronger it becomes.
Entry Point is the price at which a trader opens a position. Good entries are typically near support levels for long positions or resistance for shorts.
Take Profit (TP) is a predetermined price level where you close your position to lock in gains. Setting multiple TP levels allows you to scale out of a position gradually.
Stop-Loss (SL) is a risk management tool that automatically closes your position at a predetermined price to limit losses. A good rule of thumb is to never risk more than 1-2% of your portfolio on a single trade.
Uptrend (Bullish): Characterized by higher highs and higher lows. Moving averages slope upward, and the price stays above key MAs.
Downtrend (Bearish): Characterized by lower highs and lower lows. Moving averages slope downward, and the price stays below key MAs.
Sideways (Neutral): Price moves within a range without a clear direction. This often precedes a breakout in either direction.
Moving averages (MA 7, MA 25, MA 99) are commonly used to identify trends. When shorter MAs cross above longer MAs, it signals bullish momentum (golden cross), and vice versa (death cross).
Candlestick charts display four key prices: Open, High, Low, and Close. Green/bullish candles close higher than they open; red/bearish candles close lower.
Doji: Open and close are nearly equal, signaling indecision. Often appears at trend reversals.
Hammer: Small body at the top with a long lower wick. Bullish reversal signal when appearing after a downtrend.
Engulfing: A large candle that completely engulfs the previous candle. Bullish engulfing signals potential upward reversal; bearish engulfing signals downward.
Momentum measures the speed of price changes. The RSI (Relative Strength Index) is a popular momentum indicator ranging from 0-100. Values above 70 suggest overbought conditions; below 30 suggest oversold.
Volume represents the total number of shares or contracts traded. High volume confirms price movements — a breakout on high volume is more reliable than one on low volume.
When price rises with increasing volume, it confirms bullish momentum. When price rises but volume decreases, it may signal a weakening trend and potential reversal.