Japanese candlestick analysis on the Binance platform is used to understand price movements and predict market direction, whether up or down. These candles are a fundamental tool in technical analysis for any trader. Here’s a simplified explanation of the most important candles and their analyses within Binance.
📊 First: What are Japanese Candlesticks?
Each candle represents price movement over a specific time period (1 minute, 15 minutes, hour, day, etc.), and consists of:
Body: The difference between the open and close price.
Wick (Shadow): The highest and lowest price reached by the asset during that period.
Colors:
Green (Bullish): Close is higher than open.
Red (Bearish): Close is lower than open.
🔍 Important forms of Japanese candles and their analysis:
1. Hammer Candle
Description: Small body at the top and a long shadow at the bottom or vice versa.
Meaning: Potential bullish reversal after a downtrend.
2. Hanging Man Candle
Like the hammer but comes after a rise.
Meaning: Likely reversal to down.
3. Doji Candle
Open ≈ Close, the body is very small.
Meaning: Market indecision and may indicate the beginning of a reversal.
4. Engulfing Candle
A large candle engulfs the previous candle.
Bullish Engulfing: After a drop, indicates a rise.
Bearish Engulfing: After a rise, indicates a drop.
5. Morning Star / Evening Star
Morning Star: 3 candles, indicates the beginning of a rise.
Evening Star: 3 candles, indicates the beginning of a drop.
📉 How to follow candles on Binance?
1. Open Binance.
2. Select the market or currency (e.g., BTC/USDT).
3. Click on 'TradingView' (in the chart section).
4. Select the time frame (e.g., 1h, 4h, 1D).
5. Observe the shape of the candles and their movements.
🛠️ Tools available within Binance:
Candlestick Patterns Indicator: Can be activated in TradingView within Binance.
Combining analysis with other indicators like RSI and MACD provides higher accuracy.
🎯 Tips:
Do not rely solely on the candle itself, consider the overall market context.
Candles are more reliable in larger time frames (4 hours - daily).
Always use stop loss.$BTC