In this class, we will talk about candlestick charts, which are indispensable in trading. This is a widely used technical analysis tool in financial markets (such as cryptocurrencies, stocks, futures, etc.).
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🤔 What is a candlestick?
The core of the candlestick is to describe the price changes in the market over a certain period using four data points: opening price, closing price, highest price, and lowest price. It can reveal the overall market trend and reflect changes in market sentiment.
Price fluctuations over a period of time ultimately consolidate into a single candlestick.
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💡 Basic structure of candlestick:
1. Body:
- Indicates the price difference between the opening and closing prices.
- The length of the body directly reflects the strength of bulls and bears.
2. Shadows:
- Includes upper shadow and lower shadow, representing the market's highest and lowest prices, respectively.
- The length of the shadows directly reflects the competition between bulls and bears.
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📊 Candlestick time periods:
Each candlestick represents a time period (e.g., 1 minute, 1 hour, 1 day, 1 week, etc.). You can choose the appropriate time period based on your trading strategy, for example:
- Short-term traders: Tend to use 1-minute, 5-minute, and 1-hour candlesticks.
- Long-term investors: Tend to use 1-day, 1-week, and 1-month candlesticks.
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🛠️ Common candlestick patterns and signals:
📌 Summary table: Candlestick structure and significance
If you are familiar with the structure of candlestick patterns, it will later evolve into a frequently used naked candlestick strategy in trading.
