Candlesticks
First employed by Japanese rice merchants
in the century, candlesticks have become an essential tool for traders to analyze
price movements and market sentiment for an asset, Each candlestick represents
price activity a specific time period and comprises two main components: the
body (the thicker section), which indicates the opening and closing prices and
the wick (the thinner, located either the top or bottom), which shows the
highest and lowest traded prices within that time period.
Candlesticks are further categorized into
green or red: green candlestick represents a period when the closing price is
higher than the opening price, while a red candlestick represents a period when
the closing price is lower than the opening price.
Typically, a series of green candles
indicates a bullish move or a price increase, while a series of red candles
indicates a bearish move or a price decline for a deeper understanding
candlestick, see How to Read Candlesticks on a Crypto Chart: A Beginner’s
Guide.
Candlesticks can also be used to
interpret trading patterns, such as descending triangles, cups and handles,
wedge patterns, symmetrical triangles, trend reversal patterns, double tops,
and double bottoms. For a more detailed look into candlestick chart patterns
and how cryptocurrency traders use,
Key Takeaway
Candlesticks are a method of displaying
an asset's high, low, open, and closing prices within a specific time period.
