The Basics Of Technical Analysis: Candlestick Charts Explained

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Basics of cryptocurrency and technical analysis: Understanding candlesticks

Cryptocurrency, a digital or virtual currency that uses encryption for safe financial transactions, has gained tremendous popularity in recent years. However, it does not only apply to the value of cryptocurrencies; Understanding the dynamics behind them is crucial to making information -based investment decisions.

In this article, we explore the basics of cryptocurrency and technical analysis, focusing especially on candlesticks. You will learn to identify trends, patterns and other important indicators that can help you navigate in the constantly changing landscape of the encryption market.

What are the cryptocurrencies?

Cryptocurrencies are decentralized digital currencies that use cryptography for safe financial activities. They are based on blockchain technology, which allows many parties to record events without the need for brokers, such as banks. The most famous cryptocurrency is Bitcoin (BTC), but other significant players include Ethereum (ETH), Litecoin (LTC) and Monero (XMR).

Why use technical analysis?

Technical analysis is a method to analyze diagrams and models in the financial markets, including cryptocurrencies. By identifying trends, support and resistance levels, and other indicators, merchants can make more conscious decisions on buying or selling encryption.

Candlefish diagrams are one of the most commonly used technical analysis tools in the cryptocurrency trade. They consist of a series of horizontal lines (candles) representing the opening and closing prices of safety for a certain period of time. Each candle represents one trade, and the color of the candle indicates whether it is upward or downward movement.

Candlefoot Basics

Here are the basic components of the candleboard diagram:

Frame : Part of the candle containing actual price changes.

Wicki : Vertical lines above and below body that represent the highest and lowest prices during trading.

Shadow : A small box above or below, representing opening and closing prices.

Candle Foot Types

There are several types of candleboard charts, including:

Simple candleboard diagram : Basic type chart with one frame and no shadows.

Line diagram : A line -based chart that over time shows price changes that are often used for short -term analysis.

Column diagram : A diagram that shows prices changes in beams or squares that are often used for medium -term analysis.

Candle Footwear

In addition to identifying trends and patterns, candleboard charts are also used to identify various candle foot patterns, including:

Hammer pattern : A rising pattern with a lower heart approaching the body followed by a rise.

Maker Trend : A trend upwards with each next top of the candle above the previous one.

Shooting Star Pattern

: A growing pattern in which the upper heart approaches the body followed by a bill.

Interpretation of the Candle Form Chart

You can effectively interpret candleboard charts, you must understand the following:

Open and close prices

: The opening price is the lowest price that is reached during the trading day, while the close price is the highest price achieved.