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The dynamics of the cryptocurrency rate is reflected on the charts in different shapes and patterns. One of the popular and informative tools for the analyst is Japanese candlesticks. Let’s figure out what candles are on a cryptocurrency chart , how to read them.
What do candlesticks mean in cryptocurrency?
Japanese candlesticks are graphical figures used to analyze the price dynamics of an asset. This is one of the oldest analysis methods used on exchanges. Candles appeared in the 17th century on the Japanese rice exchanges, from which they got their name.
Candlesticks of cryptocurrency and other assets are an element of their two components: a vertical rectangle is a body indicating the level of the opening and closing price of trading, vertical lines above or below the rectangle are wicks, they show fluctuations in the rate in the opening and closing interval.
Unlike a line or bar chart, a candlestick chart provides several key indicators:
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high – the maximum price for the selected time interval;
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low – the minimum price for the selected interval;
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open – interval opening price;
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close – the closing price of the interval.
To get all these indicators on a line chart, you will have to use 4 indicators at the same time, which makes the process inconvenient and complicates perception. A cryptocurrency candlestick chart is clearer and easier to understand.
Types of candlesticks in cryptocurrency
Candles should be divided into two large groups according to trends – bullish and bearish. A cryptocurrency bullish candle is formed when the price at the time of closing the interval is higher than at the time of opening. Bearish is formed in the opposite situation.
Various combinations of bullish and bearish candles form patterns that indicate a change in trend or its continuation. There are several dozen such figures, the main ones are:
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Doji – have small bodies and long wicks, they indicate a low level of asset volatility and the development of a side trend.
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Long candles – have a large overall length, mainly it falls on the body. Indicate a trend change or persistence, depending on the location.
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Hammer – have a short body and a long lower wick (the wick is about 1.5-2 times longer than the body), the upper wick is very short or absent. The hammer indicates a trend reversal.
It is not necessary to know all the candles, it is worth studying at least the common ones: long and short, doji, hammer, maruboza , star and its varieties (morning, evening, falling), window.
How to read candles in cryptocurrency?
Reading cryptocurrency candles is not easy, especially for novice traders. When analyzing them, it is important to take into account such factors:
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The size of the body indicates the difference in the price of an asset at the closing and opening of trading. A large body indicates a large difference in rates.
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The size of the wicks indicates the extent to which the rate moves away from the opening and closing levels, reflects the psychology of market participants.
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The location of the candle indicates the dominant trend. For example, when a long bearish candle precedes a short bullish candle, the market is dominated by a bearish trend.
To learn how to read candles in cryptocurrency , you need to understand the psychology of the crypto market . The candlestick chart reflects the nature of the actions of traders, positive and panic moods on the stock exchange. To get the most accurate and complete data, it is also important to set the timeframe correctly .
Benefits of candle trading
Candles on the cryptocurrency rate chart display data clearly and in detail. They help the trader to quickly determine in which direction the trend will move. Quick analysis and determination of the optimal trade entry point increases the chances of getting a high income from the position.
Benefits of Candles on the Cryptocurrency Exchange :
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more detailed analysis compared to many other tools;
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data relevance, real-time analysis;
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visibility due to figures of different colors, ease of perception;
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high efficiency, in combination with other popular candlestick analysis tools, they give a complete picture.
Learn how to work with candlestick charts in Crypto Crew ! By taking our course, you will understand the complexities of the topic, learn how to effectively use this and other elements of technical analysis.
Author: admin_cryptocrew
