Perpetual futures (“perps”) trade 24/7 without expiry, while dated futures have set settlement dates. To confirm moves, look beyond price: check Open Interest (OI) and funding rates—they reveal whether a trend is genuinely supported or just a temporary squeeze.
Why this matters for beginners:
Most “how to read crypto futures chart” guides stop at price action. Futures add leverage, funding, OI, liquidations, order-flow—these explain who is pushing price and how long the move can last. If you learn to glance at these alongside price, your read improves instantly.
Quick checklist (every time you open a chart):
READ MORE: Crypto Futures vs. Traditional Futures: The Ultimate Guide to Key Differences
The goal: pick the chart type that makes the move easiest to see. Don’t overcomplicate it.
| Chart Type | What you see | When it helps |
| Candlestick | Open/High/Low/Close (with colored bodies and wicks) | Best all-rounder; learn patterns and wick behavior |
| Heikin Ashi | Smoothed candles (averaged); trends look cleaner | When noise is high and you want to “see the trend” clearly |
| Bars | Thin bar with left tick = open, right tick = close | If you like less color, more minimal OHLC data |
| Line | Closes connected by a line | Quick big-picture direction; hides intrabar noise |
Chart reading reading tips
Pick a timeframe that matches your lifestyle and risk.
A simple multi-TF routine (works for most beginners):
Sessions (even in 24/7):
Perpetual futures (perps) are contracts with no expiration date. Traders can hold them indefinitely, subject to periodic funding payments that tether the contract’s price to the spot market. The funding mechanism works like this: if the perp price is above the spot price, longs pay shorts; if the perp is below spot, shorts pay longs. This incentivizes arbitrage (e.g. buying spot and selling perp when it’s at a premium) and keeps prices in line. Perps dominate crypto volumes (often 80–90%) because they allow constant 24/7 trading without rollovers.
Dated futures, by contrast, have fixed settlement dates (weekly, quarterly, etc.). Before expiry, their price can be above or below spot. This price difference is called the basis (futures price minus spot price). A positive basis (futures > spot) is called contango (a premium), while a negative basis (futures < spot) is backwardation. In theory, as a dated future approaches its expiry, its price converges to the spot price (so basis → 0). Traders often exploit basis by doing cash-and-carry arbitrage: buy the cheaper leg (spot) and sell the richer (futures or perp), locking in the spread. In perps, the “carry” is realized via funding: consistently positive funding (perp above spot) effectively means longs are paying to hold, so one could short the perp and hold spot to earn that rate.
In summary, the key differences are:
Reading any crypto futures chart starts with the price action itself. A candlestick shows four key values: open, high, low, and close. The candle’s body (colored green for up, red for down by convention) tells you open vs close, and the wicks (lines) show the period’s highest and lowest prices. For example, a long green body with little upper wick means buyers dominated. A red candle with a long lower wick (hammer) indicates sellers pushed price down but buyers regained it before the close. In general, alternating green/red candles mark indecision, while clusters of one color show momentum direction. Learning to interpret wick lengths, body size, and color gives instant insight into intra-bar sentiment.
Below the price pane, volume bars indicate how much trading occurred each period. A sudden spike in volume often precedes a breakout or reversal. High volume suggests strong conviction (e.g. many traders piling in), whereas low volume may signal a weak move. A volume spike can indicate strong interest and potential price movement For instance, a break of resistance on high volume is more credible than one on thin volume. Always check if price moves are backed by volume – strong trend moves usually have expanding volume, while dry moves on little volume can be suspect.
Traders also overlay value-area metrics. A popular tool is the VWAP (Volume-Weighted Average Price). VWAP plots the average price of the asset, weighted by volume, over the trading session. In intraday trading, prices above the VWAP line are often seen as bullish (buyers in control) and below as bearish. VWAP can act like dynamic support/resistance: price often gravitates back to it after strong moves. For example, a rally that becomes overextended may pause or reverse around the VWAP as profit-taking ensues. Many traders will scale out of or enter positions near VWAP.
READ MORE: VWAP in Crypto 2025: 9 Powerful Tips and Strategies
Finally, assess volatility using measures like the ATR (Average True Range). The ATR quantifies the average range of price swings, adapting to current volatility. You can use ATR to size stops and position size. For instance, if BTC’s ATR (14) is $500, placing a stop 1×ATR or 1.5×ATR ($500–$750 away) gives the trade some breathing room against normal volatility. As AVATrade explains, “if the ATR is 150 pips, a stop of more than 150 pips will give your trade enough breathing room”. In practice, larger ATR means wider stops (and smaller positions), while a quiet market (low ATR) allows tighter stops. Using ATR for stops helps avoid getting whipsawed by ordinary noise, ensuring stops are proportional to volatility.
Open Interest (OI): OI measures how many crypto futures contracts are currently open. Read it alongside price: when price and OI rise together, new money is joining the move and the trend is likely strengthening; when price falls while OI rises, shorts are building and bearish pressure is increasing. If OI drops during a move, positions are being closed, so momentum may fade.
Funding Rate (perps): Perpetuals use funding—periodic payments between longs and shorts—to keep prices near spot. Positive funding means longs pay shorts (crowded long bias); negative means shorts pay longs (crowded short bias). Extreme readings often act as contrarian signals: very high positive funding after a rally warns of overheated longs and potential mean reversion, while very negative funding signals crowded shorts that can be squeezed.
Liquidation Heatmaps: Heatmaps highlight price zones where many leveraged positions would be liquidated. Price is frequently attracted to these clusters like a magnet, and once tagged, forced liquidations can create sharp “sweep-and-reverse” moves. Treat major clusters as potential support/resistance and avoid chasing right into them—wait for the sweep and then judge the reaction.
Order Book & Footprint (Delta): Footprint charts show executed buy vs. sell aggression (delta = buys − sells). Breakouts that print weak or negative delta—or show absorption, where heavy volume fails to move price—often stall or fail. Likewise, delta divergences (e.g., price makes a new low but delta is less negative) hint that selling pressure is waning and a reversal toward the mean or prior balance may be brewing.
Key S/R levels in crypto futures often come from recent and psychological levels, as well as data-driven zones:
In practice, combine these: if multiple cues align (e.g. PDH = round number = VWAP band = supply zone), that level is very likely to produce a reaction. Always zoom out and consider higher timeframe pivots too (weekly high/low, long-term trendlines). The more “tags” a level has, the stronger its support/resistance is likely to be.
Certain price patterns recur frequently in crypto futures trading:
In addition to these, classic candlestick reversal patterns (hammer, doji, bullish/bearish engulfing) also appear in crypto and can provide entry signals, especially when they coincide with the above pattern contexts.
1) Trend-Follow Pullback (4H → 15m): Define uptrend on 4H (HH/HL, above MA/VWAP) with OI rising. On 15m, buy a pullback into VWAP or an FVG that holds; enter on a strong bullish candle. Stop: below swing or ~1–1.5× ATR. Targets: prior high, VWAP band; trail remainder.
2) Funding-Skew Reversion (1H): If price is stretched from VWAP, funding is extreme positive, and OI high (crowded longs), look for a failure at resistance or fakeout. Short the reclaim/loss of level. Stop: above the swing. Targets: VWAP or nearest liquidation cluster. Take partials if funding cools and OI rolls over.
3) Liquidity Sweep Reversal (5–15m): Identify equal highs/lows near a heatmap cluster. Wait for a sweep and quick reclaim with supportive delta/absorption. Entry: after the reclaim candle. Stop: beyond the sweep wick. Targets: VWAP first, then range opposite/balance.
Use leverage sparingly; your edge is risk control. Risk 0.5–1% of account per trade, size positions so a full stop equals that amount. Place stops just beyond structure or ~1–1.5× ATR to avoid normal noise. Know your liquidation price and keep a buffer above maintenance margin—don’t trade at the edge. Example: on a $10k account risking 1% ($100), if your ATR-based stop is $50, size so $50 move equals $100 loss. Remember: 10× leverage means a 10% adverse move can nuke the position; 20× needs only ~5%. Combine volatility (ATR), clear invalidation, and disciplined sizing—leverage is a tool, not the goal.
It plots time (X-axis) vs price (Y-axis) using candles/bars, but adds derivatives context: leverage, funding, open interest, and liquidations. Perpetuals (“perps”) trade 24/7 with no expiry, so traders also watch funding rates to gauge crowd bias.
Match horizon to style: 1–5m scalps, 5–30m day trades, 1–4h swings, 1D/1W macro context. Start top-down (1D/4H for bias) → refine entries on 15m/5m.
Funding aligns perps with spot: positive = longs pay shorts (crowded long), negative = shorts pay longs (crowded short). Example: after a sharp rally with spiking positive funding, expect mean-reversion risk as longs get stretched.
Rising OI = new positions opening (more participation/leverage). Combos: Price↑ + OI↑ = trend build; Price↓ + OI↑ = shorts adding; Big move ± + OI↓ = exits/short-covering → move may fade.
Look for Higher Highs/Higher Lows (HH/HL) plus a VWAP reclaim/hold on dips. Bonus confirms: OI rising on pushes, neutral/cooling funding, and pullbacks holding FVG/supply-turned-demand.
It visualizes clusters where levered positions would liquidate (stop/liq pools). These levels attract price, often get swept, then price may reverse—avoid chasing into clusters; trade the sweep & reaction.
VWAP for intraday fair value/S-R, ATR for volatility-based stops/sizing, OI to confirm participation, Funding to spot crowd skew. They’re decision aids, not guarantees—combine with structure and risk rules.
Typically EU open → US session brings the most volatility; US–EU overlap is peak activity, Asia is often quieter (varies by asset/news). Higher vol = more opportunity and risk—size down and widen stops accordingly.
Yes, as an assistant: scan patterns, test rules, and set alerts/backtests; it’s not a crystal ball. Use AI to systematize your plan, but keep discretion, risk caps, and post-trade reviews.
Anush is a crypto researcher dedicated to making blockchain insights clear and accessible. A proud Solana maxi who still appreciates a good Layer 2 debate, he dives deep into market trends so others don’t have to (but really should). Passionate about simplifying crypto, he strives to make the space less intimidating and a lot more relatable, one report at a time.
