๐ฅโจ๏ธ Candlestick charts are a popular way to visualize price movements of financial assets, like cryptocurrencies, over time. Originating from 18th-century Japanese rice traders, they offer more information than simple line charts.
Each "candlestick" represents a specific time period (e.g., 1 minute, 1 hour, 1 day). It comprises a "body" and "wicks" (or "shadows"). The body shows the opening and closing prices for that period. If the closing price is higher than the opening, the body is typically green (or hollow); if lower, it's red (or filled). The wicks extend above and below the body, indicating the highest and lowest prices reached during that same period.
Traders use various candlestick patternsโlike "doji," "hammer," "engulfing"โto identify potential trends, reversals, or market indecision. For instance, a small body with long wicks might suggest market indecision, while a large green body could signal strong buying pressure. They are a fundamental tool in technical analysis, helping traders make informed decisions by quickly conveying price action and sentiment.