Japanese Candles: The Language of the Market in Your Hands
Japanese candles are the essential visual tool for understanding the price of any crypto. Each candle tells a story of supply and demand over a specific period, showing the open, close, high, and low.
* Bullish Candle (Green): Close higher than the open. Buyers dominate, the price went up.
* Bearish Candle (Red): Close lower than the open. Sellers dominate, the price went down.
The wicks (thin lines) indicate the price extremes reached.
Key Patterns to Identify Reversals:
* Hammer:
* Shape: Small body at the top, long lower wick.
* Signal: Appears in a downtrend. Suggests possible bullish reversal (buyers taking control).
* Engulfing:
* Shape: A large candle "completely covers" the previous candle.
* Signal:
* Bullish: A large green candle engulfs a previous red one (in a downtrend). Strong shift to buyers.
* Bearish: A large red candle engulfs a previous green one (in an uptrend). Strong shift to sellers.
* Doji:
* Shape: Open and close nearly equal (very small body).
* Signal: Indicates indecision in the market. After a strong trend, it can signal a possible change.
* Shooting Star:
* Shape: Small body at the bottom, long upper wick.
* Signal: Appears in an uptrend. Suggests possible bearish reversal (sellers halting the advance).
In Conclusion:
Learning to "read" these patterns gives you a key advantage to anticipate market movements and make more informed decisions. They are your first window into the psychology of trading!.