Reading Coinbase Pro Charts

Reading Coinbase Pro Charts

The interface to Coinbase Pro can be a little overwhelming when starting out and in particular the charts.  In this tutorial we take a look at the Depth and Price charts available in Coinbase Pro and how to read them.

What are the Coinbase Pro default charts

Coinbase Pro Default Charts

When you first login to Coinbase Pro you will see two charts in the centre of your screen as seen in the screenshot above.  The top chart shows the price of your chosen cryptocurrency over time and is called the Price Chart.  Whilst the second chart shows the current orders for that cryptocurrency. Requests to buy are shown in green and those in red are sell requests, this is called the Depth Chart.

Cryptocurrency and fiat Trading Pairs available in GDAX now Coinbase Pro

Each of these charts relates to the cryptocurrency you have chosen to trade.  To view the chart for another crypto at the top left of your screen choose ‘select market‘ and select the crypto you would like to view.

Now we have a basic understanding of the charts let’s take a more detailed look at the Depth and Price charts and explain how to read them.

Reading the Coinbase Pro Price Chart

Candlestick Chart

Coinbase Pro Candlestick Chart 1 day view

The price chart shows the price of the chosen crypto asset over time.  The default view is a candlestick view, each candlestick represents the price movement for the chosen time period.  So, for example if you are on the daily chart the candlestick represents the price movement over that day or on the hourly chart just for that hour. A more descriptive name for a candlestick chart is a Open High Low Close Chart (OHLC). Since this describes exactly what we are seeing

  • Body – The thick rectangle represents the difference between the open and close price for the period and is called the body
  • Colour – The colour of the body (rectangle) represents the direction of the price movement. red for price closed down, green for price closed up
  • Wicks – The thin lines at the top and bottom of the block are called wicks. These show the high and low prices for the period

Below the main price chart, you will see some grey bars, these represent the volume of trade i.e. how many people were buying and selling during a period. Technical analysts believe that volume is an important indicator to verify that a move is supported by sufficient volume.

Chart exact values displayed top right when hovering over a candlestick

Getting exact values from the chart can appear difficult but if you hover over any candlestick you will see the exact values for the open, high, low, close and volume shown towards the top right.

Candlestick chart with EMA overlay added

Towards the top left of the chart you can choose overlay options.  The available overlays are EMA 12 and EMA 26, which are moving average values.  Moving average take an average of the days prices to smooth out price data and make it easier to spot a trend. EMA stands for exponential moving average and differs from a standard moving average as it puts greater emphasis on recent prices by giving these more weight in the calculation.

The other key option available to you is to change the time period that you are viewing. It is possible to view charts showing values between 1 minute and 1 day.

Line Chart

Line chart view in Coinbase Pro

Line charts are some what easier to interpret as they simply show the closing price over time.  The volume is again shown under the chart but this time the volume has a colour. Green represents the price has closed up for the period and red down.

If you are finding this useful you will enjoy our complete Coinbase Pro Tutorial

Coinbase Pro Depth Chart Explained

Coinbase Pro Depth Chart Explained

The Depth Chart confuses a lot of people, but when you break down logically what it is showing it becomes clearer to understand and that’s what we do in this section showing you how to read the Coinbase Pro depth chart. In summary the depth chart is a graphical representation of demand and supply in the current market. As traders make orders to buy or sell these requests are added to the order book until the request is filled.  The depth chart is a graphical representation of the order book showing the total value of requests to buy and sell at various price levels.

The X axis (horizontal) represents the price of the cryptocurrency and the Y axis (vertical) represents the number of coins that could be bought or sold at that level.  For example, the chart above shows a Euro and Bitcoin trading pair. At a price point of 6260 Euros there would be demand for the purchase of approximately 200 Bitcoins. On the sell side indicated in red we can read that for a price of 6500 Euros there would be 100 Bitcoins for sale.

The plotted values are cumulative. For the buy side this means each point on the chart represents the total of people that will buy at or below that level.  So the buy level plotted at 6300 will include all those who will to buy at that level plus those that put in lower bids such as 6200, 6100 etc. The sell side is the opposite with each point showing the number of people that are willing to sell at that level or above.

The buy requests shown in green will slope downwards left to right demonstrating the law of demand that more will be demanded as the price decreases.  The red sell side will slope upwards left to right, showing that as prices rise more people are willing to sell. The point where demand and supply meet in the middle is the market price and is the current price of the cryptocurrency. Hopefully this explanation of how to read Coinbase Pro Price and Depth chart has been useful and will aid you with your Coinbase Pro trading.  Make sure you understand the risks before trading cryptocurrencies.

If your mind is still blown you may prefer the simpler interface of Coinbase, you can read further in our previous article about the differences between Coinbase and Coinbase Pro

Further Reading

Coinbase Pro Fees

How to use Coinbase Pro

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.