Crypto Chart Analysis: An Introduction to Technical Analysis [2026]

1. Reading candlesticks

Candlestick charts display the open, high, low and close, OHLC. Each candle represents an interval such as one minute, one hour or one day.

Common candlestick patterns

• Doji: A cross-like shape with nearly equal open and close, interpreted as a possible reversal signal.
• Hammer: A long lower wick and small body, used as a rebound signal at the end of a downtrend.
• Engulfing: A large candle covering the preceding candle, interpreted as a strong reversal.
• Star: A small candle separated by a gap, used as an early reversal signal.

2. Moving averages

A moving average connects the average price over a chosen period. It is a basic tool for identifying a price trend.

Common periods

• 5-day, short term: Very short-term trends and day trading.
• 20-day, medium term: A swing-trading reference.
• 60-day, medium to long term: Support and resistance for medium-term trends.
• 200-day, long term: A broad trend divider, summarized by the source as bullish above and bearish below.

Golden crosses and death crosses

Golden cross: A shorter moving average crosses above a longer one, a bullish signal.
Death cross: A shorter average crosses below a longer one, a bearish signal.

3. RSI: Relative Strength Index

RSI ranges from 0 to 100 and is used to assess overbought and oversold conditions, described in the source as relatively expensive or cheap conditions.

Divergence

Price rises while RSI falls → bearish divergence, suggesting weakening upward momentum.
Price falls while RSI rises → bullish divergence, suggesting weakening downward momentum.

4. MACD

Moving Average Convergence Divergence, MACD, measures trend and momentum through the difference between two moving averages.

• MACD line: 12-day EMA minus 26-day EMA.
• Signal line: The MACD line's 9-day EMA.
• Histogram: The difference between MACD and signal lines.

5. Bollinger Bands

Bollinger Bands place bands two standard deviations above and below a moving average, helping describe volatility and trend.

• Contraction, or squeeze: Lower volatility that may precede a large move.
• Expansion: Rising volatility as a trend develops.
• Upper-band touch: Potentially overbought, though a strong trend can continue walking the band.
• Lower-band touch: Potentially oversold.

6. Volume analysis

The saying “volume precedes price” reflects its role in assessing the conviction behind price movement.

• Rising price and rising volume: A healthier advance with continuation potential. ✅
• Rising price and falling volume: A weaker advance that may be ending. ⚠️
• Falling price and surging volume: Panic selling that may occur near a bottom.
• Sideways price and surging volume: A potentially approaching large move.

7. Chart patterns

Reversal patterns

• Head and shoulders: Three peaks, with the middle highest, interpreted as a bearish reversal.
• Double bottom: A W shape with two rebounds at a similar level, suggesting a bullish reversal.
• Double top: An M shape with two resistance tests, suggesting a bearish reversal.

Continuation patterns

• Triangle: Converging prices followed by movement in the breakout direction.
• Flag: A short consolidation after a sharp rise or fall, interpreted as continuation of the earlier trend.

8. How AI reads charts in the source's account

Human chart reading includes subjective interpretation; one person sees an advance where another sees a decline. The original guide contrasts this with AI capabilities:

• Analyze thousands of indicators at once: Combine RSI, MACD, Bollinger Bands, ATR and others.
• Compare tens of thousands of historical patterns: Search for earlier conditions similar to the present.
• Execute without emotion: Apply rules without subjective hopes that price will rise further.
• React in milliseconds: The source contrasts a human taking seconds with AI taking 0.001 seconds.