The price has always seemed to be the most important aspect of the Bitcoin ecosystem, and it actually blinds people from seeing the true potential behind a distributed, global ledger. Many of the most adamant Bitcoin proponents claim that the price doesn’t matter to them, but the reality is that it still makes sense to check in on it from time to time. BitcoinWisdom.com is one of the most widely-used Bitcoin chart websites on the Internet these days, but you have to know what you’re looking at if you’re going to be able to make any sense of the lines, candlesticks, and numbers. Here are the key things that you need to understand if you’re going to be able to use these kinds of Bitcoin charts to your advantage.
The General Layout
Before getting into the details, let’s make sure we understand the general layout of the BitcoinWisdom charts. The first thing you will probably notice is the actual chart on the left part of the page. This is where the history of the bitcoin price is plotted, and we’ll take a look at what all those lines means a bit later. On the right, you’ll notice the order book, with the current price displayed in bold green or red numbers between the buy and sell orders. In addition to the listed price for the exchange of your choosing, you can also see the price on other exchanges at the top of the page. Below the current order book is a list of past orders, and you can find the trading volume to the left of those orders.
Understanding the Candlesticks
To read the default graphs on BitcoinWisdom, you’re going to need to understand candlestick charts. Although they may seem confusing at first, the concept is actually quite simple once you learn the basics. This graph gets its name from the fact that some of the data points look like candlesticks, and the most obvious indicator on the chart should be the colour of the candlestick. If the price went down during the given period of time, then the candlestick will be read. When the candlestick is green, it means that the price went up during the time period.
The next thing you’ll want to look at is the two endpoints on the candlestick. The lines that will usually poke out of either end of either end of the main bar on the candlestick, also known as the real body, are the high and low for trading during the window of time. The real body of the candlestick represents the prices at the opening and closing points of the section of time.
It should be noted that the open and close indicators are reversed on green and red candlesticks. The top of the real body indicates the open price on a red candlestick, while the open price can be found on the bottom of a green candlestick’s real body. The lines that poke out of either end of the real body are known as the upper and lower shadows.
Those Two Other Lines
In addition to the candlesticks on the chart, you should also notice two lines. These lines represent the moving averages. This is a rather popular indicator in the world of technical analysis, and the two moving averages represented on the default BitcoinWisdom chart are 7 and 30 days. The blue one is the one that indicates the moving average over the past seven days. Traders usually use these kinds of indicators to see which direction the market could be moving in over the near term. A crossover of these two lines usually indicates a change in market sentiment. Please note that you can also change the time interval for the chart. The different intervals can be found right above the candlestick chart.
Making Your Own Adjustments
Now that you know the basics of the candlestick charts on BitcoinWisdom, you may want to open up the settings tab and see what other adjustments can be made. Different traders usually like to mess around with the settings associated with the moving averages. You can change the number of days involved with the moving averages for each line, and you can also change from simple moving averages to exponential moving averages. There are plenty of different settings to change, so don’t be afraid to click around until you find something you like.