The Basics of TradingView Market Charts
TradingView is one of the most preferred technical analysis platforms for newcomers and experienced traders — it is used by 30 million people worldwide. TradingView offers charting tools and a graphical interface that allows you to view market trends and predict price movements. The platform helps you spot the best investment opportunities.
TradingView is popular among those who trade stocks and fiat currencies, but it has also been embraced by the owners of digital assets. Traditional and cryptocurrency markets have much in common, so crypto traders leverage TradingView to analyze charts and improve the chances to profit ust like other traders. Let’s see what charts the platform offers and how you can use them to predict crypto prices.
What Are Candlesticks and Candlestick Charts?
Candlestick is a type of a chart that is convenient for showing the price dynamic. Here are two typical candlesticks:
Every one of them has a body and a wick. The body is the wide part of the figure, and wicks are thin lines above and below it. The body shows how the price has changed in a given period: for instance, one candlestick can display a 1 hour change. If the value increases, the candlestick is green, and if it plunges, the body is red.
Lower and upper edges of the candlestick body show the open and the closing price of an asset during the set period. If the candlestick is green (the price has increased), the bottom of the body represents the open price, and the top shows the closing price. It works the other way round for red candlesticks (the price has declined): the top is the open price and the bottom is the closing price. As for the wicks, they display the highest and the lowest prices during the period.
By grouping candlesticks, TradingView makes up a candlestick chart that looks like this:
How to Recognize Trends with Candlesticks?
One of the coolest opportunities that TradingView offers is the prediction of trending markets. Spotting trends is a reliable way to make price forecasts: predicting the onset of a bull or bear market is hard, while finding an upward or downward trend for a specific coin is much easier. Traders further use this data to determine where they should place buy and sell orders.
A market in an uptrend is presented on the chart below. Candlesticks form a typical pattern: there are new highs and higher lows followed by higher highs and again, higher lows. All these points follow each other in regular intervals.
Apparently, not all charts look so ideal, and sometimes spotting market trends gets harder. This is where special indicators come into play.
One of the signs of the upward market is a repeating impulsive move — a sharp price increase that finishes when the value reaches a new local high. This move is inevitably followed by a pullback — a short-term price drop before the value starts soaring again.
To make sure the market is still in the uptrend, we need to look at the closing prices of pullbacks. If the price at the end of the current pullback is higher than that of the previous one, we conclude: the market keeps growing. If a new pullback finished below the previous one, we might be looking at the reversal of a trend. Here’s how this looks on a chart:
The same rule applies backwards for detecting downward trends. In such a trend, we will spot a sequence of lower lows and lower highs:
Confirming the market direction with impulsive moves and pullbacks works the same way but backwards for the downtrend: a sharp decrease is an impulsive move here, and the following price rebound is the pullback.
If the closing price of the pullback is lower than that of the previous one, we infer that the downward trend is to continue. Conversely, if an asset price is higher after the new pullback compared to the previous one, the reversal is likely. Here’s a TradingView graph showing the downward dynamic:
What Are Support & Resistance?
Support is a price zone where the asset meets a barrier and can’t decrease anymore; resistance is the area which the price struggles to surpass. For instance, if Bitcoin starts crashing and enters the support zone, the price drop is likely to stop. The reason for this is simple: traders knew that it would be profitable to buy Bitcoin at this price and placed many buy orders here. If the value reaches the support zone, these orders are triggered, the demand for Bitcoin rises, and the price rebounds.
Resistance works in the same manner. In this zone, traders have placed numerous sell orders to take profits, and when BTC approaches this area, users sell it, which dumps the price.
If you identify support and resistance, you have better chances to:
- Determine the entry points according to the market trend,
- Spot the trend reversals to recalibrate your trading strategy,
- Place orders in a smarter way.
Identifying Entry Points
Remember how we confirm an upward trend with impulsive moves and pullbacks? Let’s expand this knowledge with support and resistance. When the market is growing, the new high may first stop at the resistance zone, but then surpass it because there are too many buyers. After resistance is broken, a new high is achieved. Now, it all depends on the pullback: if it doesn’t go below the previous high, resistance turns into support.
The same analysis works for the downtrend, but vice versa. As downward movement continues, the new current low is achieved, and this is where it bumps into support with high buyer pressure. After the pullback, the price goes down again. If it breaks the support line as users keep selling, it achieves the new low. Then we witness another pullback, and if the price rebounds from what used to be support, now we understand this is new resistance, and the downtrend is to continue.
Once you’ve spotted support and resistance zones, you understand better where to place buy and sell orders: the price has become more predictable.
Say, we are in a growing market and you’ve identified support and resistance. You know that the price is unlikely to drop below support, so you can place buy orders there. Also, it’s worth making stop-loss orders a little below the support line just in case the price happens to decrease.
As we already know, if in an upward trend a pullback ends higher than the previous one, the trend is likely to continue. If that is the case, it means resistance has been broken, and you reach the target zone where the price is good enough so you can consider taking profit.
TradingView is a platform where you can find charts like in this article for hundreds of assets. Most of them use candlesticks — a tool that investors and market analysts find the most convenient for depicting price movements. In candlestick charts, you can spot an uptrend (higher highs, higher lows; any pullback closes higher than the previous one) and downtrend (lower lows, lower highs; pullbacks close lower than the previous ones).
Once you’ve identified the trends, it’s worth finding the current support and resistance to understand where to place your orders. In a growing market, buy orders should be placed in the support zone because the price isn’t likely to go below it. Conversely, sell orders should be put above the resistance area — if the price breaks it, this means the value has increased well and you can definitely take profit.