Welcome Everyone, I’m CYPER and today in this video I’m going to explain candlestick in crypto trading. So, let’s begin.
A candlestick is a way of displaying information about an asset’s price movement.
Candlestick charts are one of the most popular components of technical analysis, enabling traders to interpret price information quickly and from just a few price bars.
Now let’s understand the bars in the candlesticks.
In the graph, we can clearly see two types of candles, a green and a red candle. The green candle represents a bullish candle. A bullish candle shows that the price has increased over the time period whereas the red candle denotes a bearish candle. A bearish candle represents that the price has decreased over the time period.
So, if we looking at a 5min chart, then each fully formed candle represents 5min worth of price action. An hourly chart means each fully formed candle represents an hour’s worth of price action and in a daily chart each fully formed candle represents a day or so on.
Moving forward, if we talk about within the candle itself, the fat rectangular part of any candle is known as the real body. What the real body shows us is the specific price action related to the opening and the closing price. So, for the bullish candle, the bottom of the candle shows the opening price and the top of the candle shows us the closing price.
Bearish candles are reversed. So, the top of the body is the opening price and the bottom of the body is the closing price. Since the bearish candles display the price decreasing.
Now, you can see the vertical lines coming out of the candles referred to different things. They are knowns as the shadows, tails or wicks of the candle. The information added by the shadows, tails or the wicks is the highest and the lowest price of the period. This is a valuable piece of information for the trader.
Now this is a 5minute trade chart from BTC to INR. We highlighted one of the bullish candles, as you can see, all the information is provided in the box. You can see the opening price, the closing price, the lowest and the highest price of the candle for that particular time.
Now, next time when you witness a trading chart you know how to read the chart and trade accordingly.