How to read cryptocurrency candlestick charts? What is the basic knowledge of cryptocurrency candlestick charts? The candlestick chart in the cryptocurrency market, due to its shape resembling a candle, is also called a candlestick chart or candlestick curve chart. The English words 'candle' and 'curve' both start with the 'K' sound, hence the abbreviation 'K chart'. So how do we read the Bitcoin candlestick chart?
How do friends who want to trade cryptocurrencies read candlestick charts? How to read cryptocurrency candlestick charts? Before answering this question, let's first understand the candlestick charts in the cryptocurrency market. Due to its shape resembling a candle, it is also called a candlestick chart or candlestick curve chart. The English words 'candle' and 'curve' both start with the 'K' sound, hence the abbreviation 'K chart'. After understanding the candlestick chart in the cryptocurrency market, let's get back to the main topic: how to learn to read candlestick charts in the cryptocurrency market? What is the basic knowledge of candlestick charts? Below, the editor will provide a detailed introduction to the basic knowledge of the candlestick chart!
How to learn to read candlestick charts in the cryptocurrency market?
1. Look at the bullish and bearish candles. Bullish and bearish candles represent trend directions, and in most exchanges and analysis software, green represents bullish candles and red represents bearish candles. A bullish candle indicates that the price will continue to rise, while a bearish candle indicates that the price will continue to fall. Taking the bullish candle as an example, after a period of battle between bulls and bears, if the closing price is higher than the opening price, it indicates that the bulls have the upper hand. A bullish candle indicates that the price will continue to rise in the next phase, at least ensuring an initial upward momentum in the next phase. Conversely, the downward momentum of a bearish candle is similar.
2. Look at the size of the body; the size of the body represents intrinsic momentum. The larger the body, the more obvious the upward or downward momentum. Conversely, the momentum is less obvious. Taking a bullish candle as an example, its body is the portion where the closing price is higher than the opening price. The larger the body of the bullish candle, the stronger the upward momentum. The larger the bullish candle body, the greater its intrinsic upward momentum, which will be greater than that of a smaller bullish candle. Conversely, the downward momentum of a bearish candle is similar.
Look at the length of the shadows; the shadows represent turning signals. The longer the shadow in one direction, the less favorable it is for the stock price to move in that direction. That is, the longer the upper shadow, the less favorable it is for the price to rise; the longer the lower shadow, the less favorable it is for the price to fall. Taking the upper shadow as an example, after a period of struggle between bulls and bears, the bulls lose. Regardless of whether the candlestick is bearish or bullish, the upper shadow has formed the upper resistance for the next phase, increasing the probability of downward price adjustment.
Basic Knowledge Explanation of Candlestick Charts in the Cryptocurrency Market:
Bullish and Bearish Candles
The main components of candlestick charts are two: bullish candles and bearish candles. In most exchanges and analysis software, green represents bullish candles, and red represents bearish candles. Generally, bullish candles represent buyers (long), and bearish candles represent sellers (short). The stronger side's power determines which K-line appears. For example, in a daily chart, if today's buying power is greater than selling power, today's K-line will be bullish (green bar). Conversely, if a bearish candle (red bar) appears, it indicates stronger selling power.
In addition, there are sometimes upper shadows, lower shadows, doji stars, and other formations, which are further ways to judge the strength of bulls and bears, but we won't discuss that for now.
In the figure above, the red and green bars at the bottom (black box) represent the trading volume for that time period. If it is a daily chart, then one bar represents the trading volume for that day; in an hourly chart, it represents the trading volume for one hour. The higher the trading volume, the taller the bar.
The green bars represent stronger buying, while the red bars represent stronger selling, corresponding to the bearish and bullish candles above.
Moving Average Chart
In addition to bearish and bullish candles, the candlestick chart also has multiple lines of different colors: white, yellow, purple, etc. These differently colored lines represent moving averages. Each colored line corresponds to a different moving average: 5-day moving average, 10-day moving average, 90-day moving average… which can be freely set.
Taking AICoin as an example, after opening the candlestick chart, click on the top 【Settings】 - 【Indicator Parameter Settings】 and fill in the corresponding number in the MA section; for example, if setting the 5-day line.
Please enter the number 5
What is a moving average?
The moving average (MA) refers to the arithmetic mean over a certain trading period. Connecting these calculated points every day forms a moving average line. For example: the 5-day moving average is the weighted average of the closing prices over 5 trading days, and then connected into a line.
Third. Time Chart
At the very bottom of the candlestick chart, we can see many time options, such as: 1 minute, 1 hour, 1 day, 3 days, weekly, etc. This represents trends over different time periods. If you click on 1 day, then you are viewing the daily chart, which shows daily trends. 1 minute represents the trend for each minute of that day.
Generally speaking, daily, 1-hour, and 4-hour charts are the most commonly used, and of course, 1-minute, weekly, monthly charts, etc., are occasionally used.
Four. Other Information
Above the candlestick chart, there is also some information, as shown in the figure below. Open: XXXX, which is the opening price, Close: XXX, represents the closing price, MA5 and MA10 are the 5-day or 10-day moving average prices for that time period.
How to learn to read candlestick charts in the cryptocurrency market? With the above introduction, I believe everyone has a better understanding of how to learn to read candlestick charts in the cryptocurrency market. In the digital currency market, technical analysis is a very important indicator for predicting short-term market trends, commonly known as candlestick charts. Regardless of whether you believe in or advocate for technical analysis, understanding candlestick charts is very necessary. Excluding technical issues related to chart patterns, indicators, and long/short battles, fundamental information such as the price trend, trading volume, lowest point, and highest point of a cryptocurrency can also be reflected in candlestick charts. If you want to learn more related knowledge, you can follow the cryptocurrency circle, and the editor will continue to update relevant reports!
Bitcoin Candlestick Pattern Analysis Tutorial
Next, we will mainly explain the usage of Bitcoin's opening and closing prices, share the market sentiment and trading methods after the breakout of technical patterns, covering most patterns, bottom patterns, top patterns, and continuation patterns, moving averages, and trend charts. The following figure shows the trend after the breakout of the converging triangle of Bitcoin, with a time period based on daily candlesticks, and the time trend formed over a longer period of three and a half months. There are also short-term candlestick charts, such as the 1-hour candlestick chart.
Figure 6 - Daily K-line for the breakout day on April 2
After the breakout, Figure 6 shows the candlestick chart for April 2, when it broke out and reached 4400-4600. As long as they see it break above 4241, it has already broken upward, or when it breaks above 4200, it has already broken upward.
Some traders use daily time periods, while others may use weekly periods, meaning they may hold positions for several weeks. In this triangular range, they may be bullish or bearish for several weeks. However, as soon as these users see the price breakout above 4200 or 4241, they will have a unified mindset that the market should rise, and short sellers will definitely exit. The key is the change in market sentiment at the moment of the breakout. It is important to pay attention to what the market sentiment was like at the time of the breakout.
Those who originally went long and see an upward breakout will continue to be bullish. After the pattern breaks out, the bullish sentiment will increase, and those who are bullish will add to their positions (note that the action is to buy). Those who originally shorted (during the period from December 15 to April 1) will exit their positions promptly after the breakout of the converging triangle when the upward trend is clear. Those who shorted will incur losses, and in a rush to break even, they will reverse and go long. At this point, those who shorted will exit their positions (this is a buy to close, note that the action is a buy), and those who are waiting will also enter the market to chase the long position, with all traders concentrating their actions as buys. Therefore, when Bitcoin broke through 4200 on April 2, it surged very quickly.
The key point of profit space is to determine the direction and speed. The price at which you buy and how much you earn depend on the speed. If you buy quickly enough, subsequent buyers will push the price higher, resulting in a larger profit space. Therefore, at critical points, trading requires a high degree of attention to real-time monitoring, especially during crucial turning points, as it can take months to approach the upper track, making it worth spending time on monitoring.
The width of the converging triangle in the daily candlestick chart of Bitcoin. How wide is the widest part of the converging triangle? The widest part is 4241-3121. The widest space is 1100. There are a small number of people who are continuously bearish for the long term, or say they are bearish at very low prices. There are also those who are continuously bullish, so this range has all kinds of people, including those who shorted at lower prices around 3400 or 3500.
However, when the price breaks above 4200, if these traders who are continuously bearish incur maximum losses of 600 to 700 points, then to make up for this loss, they would need to reverse and go long for an additional 600 to 700 points. Essentially, those who are short would reverse to break even. The maximum fluctuation in this range is 1100. Those who shorted at the lowest prices around 3300-3400 would incur the most losses. When it breaks 4200, they might lose 800 points and would need to be bullish for 800 points to balance. When the price breaks above 4200, looking bullish for 800 points means reaching 5000. The highest price would be around 4300-4400, and there could be some sell orders around 4300 or above 4250.
The above is what Liang Ge shared with everyone about how to read cryptocurrency candlestick charts. This is a detailed interpretation of the basic knowledge of candlestick charts in the cryptocurrency market. I hope this tutorial is helpful!
It can help everyone better understand the candlestick chart of the cryptocurrency market!#币安HODLer空投LA $BTC