Beginner's Guide: Candlestick Charts are the Source of Profit in the Trading Market!
If time could be reversed, back to when I first entered the trading market, I would hope someone would remind me of the importance of candlesticks, telling me this is the foundation of trading. Then I wouldn't waste so much time pursuing a foolproof strategy or chasing different technical indicator parameters, thus avoiding that fruitless path.
When analyzing a candlestick, it can be broken down into four key points: color, open and close prices, high and low prices, and shadows.
Before discussing these four key points, we must first understand one thing: each candlestick, whether bullish or bearish, represents the price fluctuation during a specific time period. If you are using a one-minute chart, each candlestick records the price fluctuation during that minute. If you are using a daily chart, each candlestick records the price fluctuation over the past 24 hours.
Color: This is how we distinguish whether a candlestick is bullish or bearish. In the cryptocurrency market, red generally represents a bearish candle while green represents a bullish candle.
Bullish Candle: This means that the closing price is higher than the opening price during a specific time period.
Bearish Candle: Conversely, a bearish candle ends with a closing price lower than the opening price.
Thus, through the color of the candlesticks, we can know whether the temporary control of the market is in the hands of buyers or sellers. Next, we have the open and close prices, high and low prices. I believe you have already mastered this basic knowledge; it's quite simple.
Let's take bullish and bearish candles as examples.
Bullish Candle: From top to bottom, we have the opening price, closing price, high price, and low price. As mentioned earlier, its closing price is above the opening price.
Bearish Candle: From top to bottom, we have the high opening price, closing low, which is the opposite of a bullish candle; its closing price is below the opening price.
Next, we discuss the body of the candle. The body represents the actual range of price movement during a specific time period. For example, in the case of a daily chart, if its opening price this morning is 10 dollars, after a day of trading, regardless of whether it has risen to 15 dollars or dropped to 7 dollars, this position will only record the price at the moment the candlestick closes. The price at that moment is what it is.
Finally, we have the shadow, which represents the high and low prices previously reached. The shadows can reveal a lot of important information, and I personally believe that shadows are a crucial part of interpreting the market.
