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# Analyzing The Bitcoin Color Chart- What Does It Mean?

The bitcoin color chart has a lot to say about the health of the bitcoin market. It shows whether people are buying or selling bitcoins and in what quantities by graphing the aggregate prices at which buyers are willing to purchase bitcoins and sellers are willing to sell them. This chart is updated every minute and is a helpful indicator of whether you should buy or sell bitcoins at this very moment. There are many different potential indicators for the bitcoin color chart. Here we will be focusing on ones based on price.

The first way to read the chart is a very simple one that can help you gauge buying and selling pressure at a given moment in time, but it is by no means sufficient for trading because it does not show you where in the price structure this volume is coming from. This method will be looking at the volume in the market rather than the prices, and this is a very important distinction. The second way to read the chart is a bit more complicated but can give you an idea of where in the price structure this volume is coming from.

Table of Contents

## What is a chart?

With a chart, it is easier to determine the buying and selling volume throughout the entire price structure. If we plot the cumulative amount of buying and selling volume as red and blue bars across the chart, then they should mirror perfectly – which they do. This means that you can see where in the price structure this volume is coming from by looking at these two bars. The red line shows us what people are buying bitcoins on an hourly basis, while the blue bar shows us what people are selling bitcoins on an hourly basis.

As you can see, the blue bar is continuously going up, and the red line is constantly going down. Since the blue bar is a reflection of how many people are selling bitcoins, it must also be reflected in the shape of the two cumulative red bars to directly reflect this buying pressure. The red bars will vary as people buy and sell bitcoins at different points in the market. You can see this by comparing the two cumulative red bars with each other to see where they intersect.

## How do line charts work?

If you are buying or selling bitcoins in the market, then you will be affected by this value. If at any point in time, these two cumulative values cross each other, this is an indication that there is buying or selling pressure for bitcoins. Remember that since these two cumulative bars are measured in US dollars, if a bitcoin bar is above the line, this means there was more buying pressure than selling pressure and vice versa. To make the chart easier to read, we color bitcoins white if they are being bought and red if they are being sold over the hour. This means that at any given point in time, you can see how many bitcoins have been bought or sold during this hour by looking at the volume of white or red dots on the chart. You will notice that each successive candle represents one hour of trading.

These charts are incredibly useful for trading charts. They are great because they give us a very clear idea as to whether you should buy bitcoins or sell them at any given moment in time. Remember that the absolute value of the volume that is being bought and sold at any given moment in time is irrelevant, and you must use your own judgment when trading because what one person sees as buying pressure may be considered by another person as selling pressure, so feel free to adjust the values in the chart according to your own judgment.

## What’s on a candlestick chart?

To truly understand the bitcoin color chart, we must first look at other types of graphs because these are used to compare and contrast the bitcoin chart. A candlestick chart is a very common graph in finance and was developed by traders to show how much people are buying or selling bitcoins at a specific moment in time. These are very helpful because they condense the amount of information on the bitcoin color chart into a digestible form. The red arrow above represents the price range over this time period, which is greater than or equal to the opening price and less than or equal to the closing price if you look at it on an hourly scale. You can learn more about the latest in cryptocurrency with bitcoin motion.

## Conclusion:

In conclusion, this market is volatile, and the underlying fundamentals are still very uncertain. As far as the bitcoin color chart and other indicators go, they are decent indicators to use in your trading decisions, but they should always be used along with your own judgment. Always try to do a lot of research on a potential investment before you invest any money into it. Never invest more than you can afford to lose, and always do your own research and take responsibility for your own decisions.

Read also: How To Choose A Bitcoin Trading Platform?

Analyzing The Bitcoin Color Chart- What Does It Mean?
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