Cryptocurrency Basics丨Helping Newcomers Understand Candlestick Charts

Basic Composition of Candlesticks

A candlestick typically consists of three parts:

Upper Shadow: Located above the candlestick, it represents the price range between the highest price and the closing price (or opening price, depending on the nature of the candlestick).

Body: Represents the price range between the opening price and the closing price. A bullish candle (red or white) indicates that the closing price is higher than the opening price, while a bearish candle (green or black) indicates that the closing price is lower than the opening price.

Lower Shadow: Located below the candlestick, it represents the price range between the lowest price and the opening price (or closing price, depending on the nature of the candlestick).

Interpretation of Candlesticks

Interpretation of a Single Candlestick

Bullish and Bearish Candles: A bullish candle indicates that the market rose during that period, while a bearish candle indicates a decline.

Body Size: The longer the body, the stronger the market's momentum. A longer bullish body indicates stronger upward momentum; a longer bearish body indicates greater downward momentum.

Shadow Length: The longer the shadow, the stronger the resistance or support in that direction. A longer upper shadow indicates greater resistance to upward movement; a longer lower shadow indicates stronger support.

Interpretation of Candlestick Patterns

Double Bottom and Double Top: A double bottom (W pattern) signals a market reversal from a downtrend to an uptrend; a double top (M pattern) signals a reversal from an uptrend to a downtrend.

Head and Shoulders Bottom and Top: A head and shoulders bottom is a pattern indicating a market reversal to the upside, while a head and shoulders top indicates a reversal to the downside.

Three White Soldiers and Three Black Crows: Three white soldiers are three consecutive bullish candles, indicating strong upward movement; three black crows are three consecutive bearish candles, indicating weak downward movement. However, it should be noted that the three black crows during an uptrend may represent a buildup of energy by the bulls.

Combining Position and Volume

Position: The position of the candlestick is crucial for determining its nature. For example, a long upper shadow that appears early in an uptrend may indicate a trial by the main force, while a long upper shadow at the end of an uptrend may signal a market peak.#加密市场反弹 #比特币哈希率创新高 #比特币诞生16周年 #ADA热度上升 #BIO开盘