The Basics Of Technical Analysis: Candlestick Charts Explained

Basics of cryptocurrency and technical analysis: Candlestick Chart Understanding

Cryptocurrency, digital or virtual currency, which uses cryptography for safe financial transactions, has gained tremendous popularity in recent years. However, this is not limited to the value of cryptocurrencies; Understanding their underlying dynamics is essential for making conscious investment decisions.

In this article, we will go into the basics of cryptocurrency and technical analysis, focusing on candlestick charts. You will learn how to identify trends, patterns and other important indicators that can help you navigate the constantly changing cryptographic market landscape.

What are cryptocurrencies?

Cryptocurrencies are decentralized digital currencies that use cryptography for safe financial transactions. They are based on blockchain technology, which allows several parties to register transactions without the need for intermediaries, such as banks. The most well -known cryptocurrency is Bitcoin (BTC), while other prominent players are Ethereum (ETH), Litecoin (LTC) and Monero (XMR).

Why use technical analysis?

Technical analysis is a method of diagrams and model analysis in the financial markets, including cryptocurrencies. By identifying trends, support and resistance levels and other indicators, traders can make more informed decisions on buying or selling cryptocurrencies.

Candlestick charts are one of the most widely used technical analysis tools in cryptocurrency trade. They consist of a series of horizontal lines (candles) that reflect security and closure prices over a specified period of time. Each candle denotes one trade with a candle color indicating whether it is up or down.

Candlestick chart basics

Here are the basic components of the candlestick chart:

1
Body : The part of the candle containing actual price movements.

• wick : vertical lines above and below the body, which are the highest and lowest prices reached on the day of trading.

3
Shadow : A small box above or below the wick that depicts opening and closing prices.

Types of candlestick charts

There are several types of candlestick charts including:

1
Simple candlestick chart : The simplest type of chart with one body and no shadows.

• Line diagram : A line -based chart that shows the price movements over time, often used for short -term analysis.

3
Band diagram : Chart showing price movements as bands or square, often used for medium -term analysis.

Candlestick Articles

In addition to identifying trends and models, candlestick charts are also used to identify different candlestick patterns, including:

1
Hamura article : Bullish article in which the lower wick approaches the body followed by rise.

• Maker trend : an upward trend in which each subsequent candle upper wick is above the previous one.

3
shooting star article : A beary article in which the upper wick is approaching the body followed by a fall.

Interpretation of candlestick chart

To effectively interpret Candestick charts, you need to understand as follows:

1
Open and close prices : The discovery price is the lowest price reached on trading day, while the nearest price is the highest price.

• Height and fall : Identification of high and low prices can help determine trends and patterns.

3
Support and Resistance Levels : These are levels when the price tends to bounce or switch back to the trend in reverse.

Conclusion

In conclusion, understanding of candlesticks is essential for making conscious investment decisions in the cryptocurrency markets.

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