What is a Candlestick?

What is a candlestick?

Our sincere apologize to you if you’re reading this thinking “oh boy I’m about to learn about those sticks made of wax that light with FIRE!!” because that is not the kind of candlestick will learn about here. You are going to learn about the type of candlestick that traders take advantage of in Technical Analysis with cryptocurrency and all other kinds of assets to make a profit. 

To be a successful investor, you need to understand the importance of candlestick charts because they convey a lot of information about your coin or other asset. Simply put, candlesticks will help you determine price movements. 

Some vital pieces of information these charts show is price volatility and market sentiment (which are key to identifying trends in price movement). Candlestick charts show open, close, high, and low prices for a time period that you determine by using tools such as the free ones offered by Trading View.

A screenshot of text

Description automatically generated

A bullish green candlestick (like the one you see above) shows the high, low, opening, and closing points on a chart for a time period (that you choose) where the closing price is above the opening price. At the top of the candle is an “upper wick” and at the bottom of the candle is a “lower wick” and these may sometimes be referred to as ‘shadows’.

A bearish red candlestick (like the one you see below) shows the open, low, high, open and closing points on a chart for a time period where the opening price is above the closing price. At the top and bottom of the candle are wicks just like in the green candlestick which are also sometimes referred to by traders as ‘shadows.  

A screenshot of text

Description automatically generated

 

 

Traders will utilize these charts to decide on possible price movement based on older patterns. Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies. You will be able to determine the time period you want each candlestick to represent such as monthly, weekly, daily, and even by  the hour or minute. 

A close up of text on a black background

Description automatically generated

Leave a Comment