#CryptoCharts101
Understanding Candlestick Patterns and Chart Basics in Crypto Trading
When you look at a crypto chart, you’ll often see red and green bars. These are called candlesticks, and they show how the price moves over time. Learning to read them can help you make better trading decision.
What Is a Candlestick?
Each candlestick shows 4 things for a specific time period (like 1 hour or 1 day):
• Open – the price at the start
• Close – the price at the end
• High – the highest price during that time
• Low – the lowest price during that time
• Green candle = price went up
• Red candle = price went down
Common Candlestick Patterns
1. Doji – The price opened and closed at the same level. This shows indecision and can signal a possible reversal.
2. Hammer – A small body with a long lower wick. Often appears at the bottom of a downtrend and signals a possible trend reversal.
3. Shooting Star – A small body with a long upper wick. Can signal a trend reversal at the top.
4. Engulfing Pattern – A big candle that covers the previous one. Bullish engulfing at the bottom signals a rise; bearish engulfing at the top signals a drop.
Chart Basics to Know
• Support: A price level where the coin usually stops falling.
• Resistance: A price level where the coin usually stops rising.
• Trendline: A line that connects highs or lows, showing the direction of the trend.
How to Spot Trend Reversals or Breakouts
1. Trend Reversal
• Look for patterns like double tops, double bottoms, head and shoulders, or strong candlestick signals like hammer or engulfing near support/resistance levels.
• Volume increases can also confirm a reversal.
2. Breakouts
• Breakouts happen when price moves strongly above resistance or below support.
• Look for a tight range, like a triangle or flag pattern, followed by a big candle with strong volume.
Final Tip
Don’t rely on one signal alone. Combine candlestick patterns with trendlines, volume, and support/resistance for better results. Always trade with a plan and manage your risk.