Crypto Update | Crypto Charts 201: Deciphering Candlesticks and Market Trends

Summary

Markets Daily Crypto Roundup: Crypto Update | Crypto Charts 201: Deciphering Candlesticks and Market Trends

Release Date: April 4, 2025
Host: Jen Senasi
Co-Host: Andy Baer
Guest: Josh Devoe, Research Lead at CoinDesk Indices

---

Introduction

In the April 4th episode of Markets Daily Crypto Roundup, hosted by Jen Senasi of CoinDesk, the discussion delves deep into the intricacies of cryptocurrency chart analysis. Co-host Andy Baer and guest Josh Devoe guide listeners through understanding candlestick charts and deciphering market trends, providing valuable insights for both novice and seasoned traders.

Understanding Candlestick Charts

At [03:00], Jen introduces the primary focus: candlestick charts. Josh Devoe explains that candlesticks offer a more detailed view of price movements compared to line or area charts by presenting the open, high, low, and close prices within a specified time frame.

"Candlesticks are the most popular way to interpret a chart. They really give you the most granular sort of view on how to understand price and price movement."
— Josh Devoe at [03:06]

Josh emphasizes the importance of the candlestick body and wicks (or shadows), which indicate the price movement during the candle period that wasn't sustained. For example, a long wick below the body suggests that while the price dipped, buyers intervened to push it back up by the close of the period.

Andy Baer adds at [05:07]:

"It's amazing. You can get immediately a feeling for how choppy and indecisive a day has been, given the size of the rectangle and the length of the wicks."

This highlights how candlestick charts provide immediate visual cues about market volatility and trader sentiment within the set timeframe.

Analyzing Daily Bitcoin Chart

Moving to [05:35], Josh presents a narrative based on a daily Bitcoin chart. He describes a significant retracement from an opening price of approximately $87,000 to a current trading level of $84,200. Despite this drop, there's potential for buyers to step in before the candle closes, offering cues about market direction.

"We're looking at the daily price movement rather than just what happened at the end of the day."
— Josh Devoe at [04:11]

He further breaks down the chart by examining hourly candles, revealing a consistent downtrend, which provides a more granular understanding of the day's price action.

Resistance and Support Levels

At [07:00], the conversation shifts to the significance of resistance and support levels in trading. Josh explains that these levels act as psychological barriers where significant buying or selling typically occurs, leading to price reactions.

"Support and resistance levels are really fundamental to traders. They indicate areas where we see a lot of market activity."
— Josh Devoe at [07:00]

Andy reflects on the chart's behavior, noting periods of rapid price acceleration contrasted with more volatile, fluctuating trends. This dichotomy underscores the importance of not only identifying these levels but also understanding the context in which they operate.

Volume as a Momentum Indicator

At [08:11], Josh delves into the role of volume in interpreting market momentum. He illustrates how volume expansions can signal the start of new market phases or highlight periods of excessive exuberance that may precede retracements.

"Volume is a really important role in digital asset markets. They can mark the start of a new phase or mark the top of a current phase where we start to retrace lower."
— Josh Devoe at [11:54]

Using Bitcoin as an example, Josh contrasts its established institutional flow with assets like Solana, where high volume might indicate different market sentiments. This distinction is crucial for traders to accurately interpret volume data relative to the specific asset in question.

Strategies for Timing Investments

Towards [13:05], Josh addresses a pivotal question for investors: determining the right time to invest in Bitcoin. He differentiates strategies based on investment horizons:

• Long-Term Investors: Should focus on higher time frames, using indicators like exponential moving averages and support/resistance levels to identify entry points during market retracements.

• Intraday Traders: Need to employ tight validations and exit strategies, prioritizing a keen understanding of market volatility and rapid price changes.

Josh emphasizes the importance of monitoring support and resistance levels, particularly noting how previous all-time high resistances can flip into support, serving as potential entry signals for investors.

"A great place to start might be the previous all-time high resistance which may flip into a support that tends to be quite a good signal for investors."
— Josh Devoe at [13:05]

Market Outlook and Current Trends

In the latter part of the episode, Josh provides an analysis of the current market conditions, highlighting Bitcoin's choppy behavior and the lack of strong catalysts to drive significant price movements. He attributes this to waning excitement from events like presidential elections and the stabilization of previous market exuberance.

"We're seeing a lot of choppy behavior within Bitcoin and the wider market as well."
— Josh Devoe at [09:58]

With volume remaining relatively low, the market appears poised for a potential breakout, either upwards or downwards, depending on emerging catalysts and investor sentiment.

Conclusion

The episode offers a comprehensive guide to understanding candlestick charts and market trends within the cryptocurrency space. By dissecting chart components, analyzing volume, and discussing support and resistance levels, Josh Devoe equips listeners with the tools necessary to make informed trading and investment decisions. Whether you're a long-term investor or an intraday trader, the insights shared provide a foundational framework to navigate the volatile crypto markets effectively.

---

Note: This summary excludes the initial advertisements from Mint Mobile and Audible, focusing solely on the podcast's valuable content.

Transcript

[Ryan Reynolds]

Ryan Reynolds here from Mint Mobile with a message for everyone paying big wireless way too much. Please, for the love of everything good in this world, stop with Mint. You can get premium wireless for just $15 a month. Of course, if you enjoy overpaying. No judgments. But that's weird. Okay, one judgment anyway. Give it a [e-mail] Switch upfront payment.

[Audible Narrator]

Of $45 for 3 month plan equivalent to $15 per month required intro rate first 3 months only, then full price plan options available, taxes and fees extra. See full [e-mail] craving your next action packed adventure, Audible delivers thrills of every kind on your command. Like Project Hail Mary by Andy Weir where a lone astronaut must save humanity from extinction. Narrated with stunning intensity by Ray Porter. From electrifying suspense and daring quests to spine tingling horror and romance in far off realms, unleash your adventure aside with gripping titles that'll keep you guessing. Discover exclusive Audible originals, hotly anticipated new releases and must listen bestsellers that hook you from the first minute. Because Audible knows there's no greater thrill than the one that speaks to you. Discover what lies beyond the edge of your seat. Start your free 30 day trial at audible.com wondery us that's audible.com wonderyus.

[Jen Senasi]

Hello and welcome to Markets Daily. I'm Jen Senasi here with my co host, head of product and research at Coindesk Indices, Andy Baer. Andy, how's it going?

[Andy Baer]

I'm doing great, Jen, how are you?

[Jen Senasi]

I'm doing just fantastic. Now as our audience knows, we cover the markets on this show. We talk about trends and charts. Andy, you've been a recurring co host and guest and we want to empower our audience to use the tools that we talk about often to be able to read some of those charts on their own and come away with some of their own conclusions. So joining us to walk us through what you need to know is research lead at core Coindesk, Josh Devoe. Hey Josh.

[Josh Devoe]

Hi Jen. Hey Andy. How's it going?

[Jen Senasi]

We are just ready to learn everything you have to teach us. And so I want you to start at the very beginning, you know, when, when we're talking about understanding chart logic for some of our audience, they their introduction into reading some of these types of charts has really been through crypto. What do they need to know?

[Josh Devoe]

Yeah, it's great question and what we're trying to do here is really build the foundations for those looking to understand how to interpret a chart, understand the fundamentals and really just get an idea of what they're looking at and they can be confusing. So we're hoping to decipher some of that today in terms of some of the key fundamental principles we'll be looking at. We'll be looking at candlesticks versus line and area charts, learning how to understand those and which ones to use in certain scenarios. We'll be looking at time frames, resistance and support levels, as well as potentially volume and market structure.

[Jen Senasi]

All right, let's start with candlesticks. What do we need to know when it comes to candlesticks? Talk to me about what we're looking at here.

[Josh Devoe]

Yeah, so candlesticks are the most popular way to interpret a chart. They really give you the most granular sort of view on how to understand price and price movement. So what is different about candlesticks versus other charts is they give you certain values which retain to open, high, low and close. So when you're looking at a chart, like a line chart or an area chart, for example, what you're really only seeing there is the close price. But a candlestick chart gives you the price movement during a time period, which gives traders a lot more information to understand what they're looking at and what's happened in between. A 30 minute period, for example.

[Andy Baer]

So, Josh, I'm looking at the chart that you're showing and I see some areas with different colors. I noticed that it looks like one day is selected as your, as your, as the period. So what does each box mean? I see a, a solid rectangle with lines hanging above and below those rectangles, and they're different colors. So, so, so a first time candlestick chart viewer, how are they best equipped to interpret this?

[Josh Devoe]

Yeah, great question. I think when you're looking at a candlestick chart, there's sort of two parts to a candlestick that are really important to understand. The first is the body of the candlestick, and that determines what the open and close price was. And those who've looked at candlesticks a bit more closely, they'll notice these sort of long stems, or wicks as we call them in trading. And what they indicate is a price movement happening during a candle period, but unfortunately unable to sustain prices close to those levels. So when we're looking at a candlestick here, what you'll notice is this long wick. To the downside, that means price actually ended up at about $78,300. But buyers stepped in and brought it all the way up to $84,000 before the daily candle closed. So what that shows you is what happened during the day rather than just what happened at the end of the day.

[Andy Baer]

It's amazing. You can get immediately a feeling for how choppy and indecisive a day has been, given the size of the rectangle and the length of the wicks. Correct?

[Josh Devoe]

Yes, absolutely. The candle structure gives you everything you need to know about what's happened during that time period. So, as you mentioned, we've got the daily time frame selected. This shows you everything that might have happened in a daily candle.

[Jen Senasi]

Josh, put a little narrative together for me. We now understand a little bit more about what some of the lines mean on this chart. But if we're looking at this exact chart, talk to me about the narrative of this asset for the day.

[Josh Devoe]

Yeah, for sure. I mean, we're looking at the daily bitcoin chart here, and so far we've seen quite a fast retracement since the start of the day. We started off at about $87,000. We're currently trading at 84, 200. So this is a retracement worth noting. But since the daily candle hasn't closed yet, there's still time for buyers to step in, create a wick, and bring price back up to close to where it opens. So we do need to wait for the confirmations to occur, which is after the candle has closed. But this does give you an indication of what's happening. And if you wanted to dive a little bit deeper, a daily candle is made up of smaller time frame candles. So to get a better understanding of what's happened today, we can also look at the hourly candle and take it from the daily open. So you can see here, this is where price opened today. And through looking at the hourly candle, you can see there's been a consistent downtrend in the price action of bitcoin today.

[Jen Senasi]

Now, we often talk on this show when we have market analysts on about resistance and support levels. Is that something we can draw from looking at a chart like this?

[Josh Devoe]

Yes, definitely. Support and resistance levels are really fundamental to traders. And what they indicate is, you know, buy and sell walls or areas of interest where we see a lot of market activity. Price tends to, you know, react in these levels. And because there's a presence of orders typically around these resistance and support levels, reactions occur more frequently than in other in other areas.

[Andy Baer]

You know, I'm looking at this and trying to kind of COVID my right eye and see if my interpretation from the left eye would have been a good prediction there. There are two environments where you can see quick price acceleration. Right. All the way on the left of the screen I see pretty much updates one after the other. And I'm just noting this by the color of the candles. But then I see the trend continue with much more up and down behavior. So people are going to be looking at charts to think about what comes next. Maybe what conclusions are the safest to draw and maybe what conclusions should people avoid drawing to make sure they don't get it wrong?

[Josh Devoe]

Yeah, I think when you're looking at price trends, market structure, you can tend to see when things start to accelerate or slow down. And we like to look at a few things to understand whether momentum is there to support price movements. One great way of doing this is by looking at volume. And we like to use volume as a, an indicator of overall momentum. So you said you were trying to interpret maybe what was happening during that acceleration period. And what we've seen is over the course of 2024, or at least for the majority of 2024, there was this consolidation of volume. Nothing was really happening. We were range bound. We had this all time high previously set as a resistance level which lasted for about 240 days. As soon as we started approaching this all time high resistance, we saw that volume expansion and this was a great indicator for momentum, a great indicator that we would enter price discovery with buyers stepping in and taking control. And naturally, as you can see, this allowed for a break of about 74,000 all the way up until 108,000 where we marked a new all time high resistance. And we can use these support and resistance levels to understand range bound trading. What we tend to see throughout chart behavior is periods of acceleration and expansion or contraction and then just periods of ranging low volatility. And you can use volume and support and resistance levels to better understand the type of behavior the market is displaying and what market participants are thinking. And we have been in this sort of range bound behavior since we entered price discovery.

[Jen Senasi]

Tell me how you interpret this. If we look at this, these resistance lines here, what's the narrative there?

[Josh Devoe]

Yeah, so at the moment we saw in that previous range bound behavior where we were trending a little bit below our all time high resistance for the majority of last year. We did get that volume expansion which was really important. This was on a lot of narrative based around the presidential election, Trump coming into office, a lot of excitement and exuberance around, you know, the strategic Bitcoin reserve. So we saw a lot of the macro factors being displayed on the chart and whether or not you were paying attention to the news, which I believe is very important to do. You can still see a lot of the, the excitement in the chart just based purely on volume. So when we're looking at this at the moment, we've had a quite a lagging bit of price action, mostly mostly attributed to, you know, some of the trade tariff wars possibilities. A bit less excitement around Trump's inauguration now that that has died down, and there's a lot of headline risk. So we're seeing a lot of choppy behavior within Bitcoin and the wider market as well. So I would note that we're probably in a lower volatility range where there's not too much happening. Catalysts are probably needed either to break us comfortably to the downside or to the upside. But seeing as we're seeing a lot of headlines coming out that aren't necessarily causing these huge pushes, it's safe to say that we might be rangebound for a little bit longer.

[Andy Baer]

Yeah, that low volume is certainly kind of a signal that patience and dry powder is a good place to be right now, I guess. Would you expect another high volume period? This may be different in different asset classes, too, right, Josh? High volume in equities, for example, can usually mean things are going the other direction. So should people interpret a volume expansion necessarily for Bitcoin as a bullish signal or as just a shock away from the current range?

[Josh Devoe]

Yeah, I think volume plays a really important role in digital asset markets generally. They can either mark the start of a new phase or they can mark the top of a current phase where we start to retrace lower. Good example might be in the Solana chart, which topped out at about $300. What we saw there is it topped out on the highest volume it's seen intraday. So they can also mark out periods of, you know, excessive exuberance. And that could also be a cautionary tale. But for an asset like Bitcoin, which is a bit more established, it has institutional flow, volume is a bit cleaner and can be more of an interpretive factor, at least for continuation. But volume interpretations do vary depending on what asset you're looking at and the time period which you're considering. So there are many factors at play. It's about painting an overall picture of confluence.

[Jen Senasi]

Now, if we, if we look at this generally, if I'm. If we're looking at the chart that's in front of us now, talk to me about some of the. What are the factors I should be weighing if I'm looking for a good time to invest?

[Josh Devoe]

Yes, I think looking for A good time to invest in Bitcoin is the golden question. Depending on your time horizon, I think that is everything. So we mentioned time frames earlier. In my opinion, most traders will sort of look at a macro picture a one day, one week time frame and maybe try to time entries on a lower time frame just to be a bit more precise. But for an asset like Bitcoin, which if you have a long term view, which hopefully we all do, then I would be looking for entry triggers on a higher time frame. Looking to buy retracements, you could use trend indicators, things like exponential moving averages is a is a trader favorite and those can help you to identify more high high risk to reward areas to DCA in your Bitcoin intraday trading you take a very different approach. You need tight invalidations, a good understanding of how to get out of a trade rather than just purely how to get in. But if you're just looking to invest, you can use very simple trading indicators and ideas like support and resistance for example to time your entry. So a great place to start might be the previous all time high resistance which may flip into a support that tends to be quite a good signal for investors. And you can always monitor the market to understand if we're going to start accepting below that value, in which case it might be a higher risk trade than initially thought.