The most widespread type of chart among traders.
Candlestick charts display more data than just the closing price: each ‘candle’ shows the opening price, the lowest and highest price of the given time-period as well as the closing price.
In addition, the color of the candle body indicates whether the closing price was higher than the opening price (usually a green bar, called an ‘up-bar’) or lower than the opening price (usually with a red body, called a ‘down-bar’).
The candlestick chart belongs to the family of OHLC (open high, low close) price charts, but there’s a multitude of other chart types/styles to suit any advanced trader’s preference.
Another type worth mentioning is the non-time based (NTB) range chart. Beginners may find them less intuitive and more difficult to grasp, however.
Candlestick price charts contain a lot of useful information for the skilled trader’s eyes, such as whether a candle’s spread is wide or narrow (illustrates the difference between high and low prices), where the closing price is relative to the high and low etc.
Together with the patterns that groups of candlesticks form, this is what traders base their trend biases on either bullish (rising prices), bearish (falling prices) or ranging sideways.
Learn to Read Candlesticks
If you’ve ever been on a cryptocurrency exchange you will have seen a candlestick chart. It is by no means a chart exclusive to cryptocurrency, but it is an extremely powerful tool because of the amount of information shown in a concise manner. For anyone looking to invest and trade in cryptocurrencies, learning how to read a basic candlestick chart is a vital skill.
Common Candlestick Patterns
Once you learn how to read a candlestick, the next step is spotting trends in the charts. The candlestick chart is much more than just information about the prices; it can give savvy investors an idea of what the market is going to do next. While no one can predict the future, learning some of the basic trends will help you to understand why the market moves the way it does.
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