#CryptoCharts101

Candlestick Patterns and Charting Basics

If you trade continuously, understanding charts and Japanese candlestick patterns will give you a real advantage in determining when to enter and when to exit a trade.

What are the basics of charting?

The time frame (Time Frame) of 15 minutes, 1 hour, 4 hours, and daily, etc. The higher the time frame, the more of a long-term view you get, and the lower the time frame, the more you feel the instantaneous fluctuations. The vertical axis represents price, and the horizontal axis represents time.

Volume: The bar below shows trading volume; the longer the bar, the more activity there is.

💡Always start with a 1-hour or 4-hour time frame if you are a Swing Trader and a 15-30 minute time frame if you are a Scalper.

Components of the Japanese Candlestick (Candlestick Anatomy)

Each candlestick has:

Body: The difference between the opening and closing price.

Wicks/Shadows: The highest and lowest price reached during the period.

Green color (= closing higher than the opening) or Red color (= closing lower).

Famous Candlestick Patterns and Their Uses

Hammer

Small body at the top, with a long lower wick.

Occurs after a decline; indicates that buying traders pushed the price back up.

Entry Signal: If confirmed by a rise in the next candlestick, you may enter Long.

Shooting Star

Small body at the bottom, with a long upper wick.

Appears after a strong rise; indicates that traders sold at this time.

Exit or Entry Short Signal: If the next candlestick drops, then it may be time to sell.