Trading cryptocurrencies within a single day involves buying and selling assets without leaving any open positions at the end of the trading session. Traders aim to profit by purchasing cryptocurrencies at lower prices and selling them at higher rates, or by short-selling when prices are high and repurchasing at lower levels during the same day. This approach requires a solid understanding of market dynamics and the ability to analyze relevant information to make informed decisions, as cryptocurrency prices are influenced by various factors, including supply and demand.
One valuable tool for traders is candlestick chart patterns, which help visualize price movements and trends. In the following sections, we will discuss how to interpret these candlestick charts effectively.

What are Candlestick Graphs/Charts?
Candlesticks are a visual representation of the size of price fluctuations. Traders use these charts to identify patterns and gauge the near-term direction of price in the cryptocurrency market.
Composition of a Candlestick Chart
This is how a candlestick chart pattern looks like:


As you can see, there are several horizontal bars or candles that form this chart. Each candle has three parts:
The BodyUpper ShadowLower Shadow


Also, the body is colored either Red or Green. Each candle is a representation of a time period and the data corresponds to the trades executed during that period.
A candle has four points of data:

How to Analyze Candlestick Chart for Cryptocurrencies
The body of the candle in a candlestick chart represents the opening and closing price of the trading done during the period for a particular cryptocurrency. Understanding this is crucial for candlestick trading. Traders can quickly see the price range of the cryptocurrency for the said period by looking at the chart. Moreover, the color of the body indicates whether the price is rising or falling. For instance, if a candlestick chart for a month with each candle representing a day has more consecutive red candles, then traders know that the cryptocurrency's price is falling.
Vertical lines called wicks or shadows above and below the body show the highs and lows of the traded price of the cryptocurrency. Traders can use this information to analyze the sentiment of the market towards the cryptocurrency.
Candlestick Chart Patterns
Candlestick charts are an excellent way of understanding investor sentiment and the relationship between demand and supply, bears and bulls, greed and fear, etc., in the cryptocurrency market. Traders must remember that while an individual candle provides sufficient information, patterns can be determined only by comparing one candle with its preceding and next candles. To benefit from them, it is important that traders understand patterns in candlestick charts.
Let's divide the patterns into two sections:
Bullish PatternsBearish Patterns
Analyzing these patterns can help traders make informed decisions about buying or selling cryptocurrencies.
Bullish Patterns
Hammer pattern
This is a candle with a short body and a long lower wick. It is usually located at the bottom of a downward trend. It indicates that despite selling pressures, a strong buying surge pushed the prices up. If the body is green, it indicates a stronger bull market than a red body.


Inverse Hammer pattern
This is a candle with a short body and a long upper wick. It is usually located at the bottom of a downward trend too. It indicates buying pressure followed by selling pressure. It also indicates that buyers will soon have control.


Bullish Engulfing pattern
This is a pattern of two candlesticks where the first candle is a short red one engulfed by a large green candle. It indicates a bullish market that pushes the price up despite opening lower than the previous day.


Piercing Line pattern
This is a two-candle pattern having a long red candle followed by a long green candle. Also, the closing price of the second candle must be more than half-way up the body of the first candle. This indicates strong buying pressure.


Morning Star pattern
This is a three-candle pattern that has one candle with a short body between one long red and a long green candle. There is usually no overlap between the short and the long candles. This is an indication of the reduction of the selling pressure and the onset of a bull market.


Three White Soldiers pattern
This is a three-candle pattern that has three green candles with small wicks. These candles open and close higher than the previous day. After a downtrend, this is a strong indication of an upcoming bull trend.


Bearish Patterns
Hanging Man pattern
This is a candle with a short body and a long lower wick. It is usually located at the top of an upward trend. It indicates that the selling pressures were stronger than the buying thrust. It also indicates that bears are gaining control of the market.


Shooting Star pattern
This is a candle with a short body and a long upper wick. It is usually located at the top of an upward trend too. Usually, the market opens higher than the previous day and rallies a bit before crashing like a shooting star. It indicates selling pressure taking over the market.


Bearish Engulfing pattern
In candlestick chart analysis, this is a pattern of two candlesticks where the first candle is a short green one engulfed by a large red candle. It usually occurs at the top of an upward trend. It indicates a slowdown in the market rise and an upcoming downtrend. If the red candle is lower, the downtrend is usually more significant.


Evening Star pattern
This is a three-candle pattern that has one candle with a short body between one long red and a long green candle. There is usually no overlap between the short and the long candles. This is an indication of the reversal of an upward trend. This is more significant if the third candle overcomes the gains of the first candle.


Three Black Crows pattern
This is a three-candle pattern that has three consecutive red candles with short wicks. These candles open and close lower than the previous day. After an upward trend, this is a strong indication of an upcoming bear market.


Chart patterns can be used to understand trends and sentiment of the cryptocurrency markets. There are several other patterns to explore in order to gain a deeper understanding of market movements. Use this as a starting point and continue to learn and refine your analysis skills.

Happy trades and successful investments!💪👊
@Crypto Insiders

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During the analyses, you can often see all kinds of charts and diagrams from which they "predict" or just analyze what happened. In this regard, we have collected a few things for you to pay attention to when looking at these charts.

What are candles?

A candlestick is a type of price chart used in technical analysis that displays the high, low, and opening and closing prices of an asset for a given time period.

This method originated with Japanese rice traders who used it to track market prices and daily movements hundreds of years before it became popular in the United States.

The wide part of the candle is called the "real body". This shows traders where the price opened and closed within a given time period. And the wicks of the candle show the maximum and minimum price within the given period.

Source: Investopedia

Candles reflect the impact of investor sentiment on asset prices and are used by technical analysts to determine when to enter or exit trades. Candles can be used for any liquid financial instrument, such as stocks, currencies and futures.

Long green candles indicate strong buying pressure, meaning the price is rising. However, they should be examined in the context of the market structure, not individually. For example, a long green candle is likely to have more significance if it forms at a significant price support level. Long red candles, on the other hand, indicate significant selling pressure. This suggests that the price is falling.

By observing these candles, we can see trading patterns in the long or short term, which are used in the analysis.

The movements of Bitcoin in 2021. Source: trandingview.com

What is technical analysis?

Technical analysis, in short, is a trading discipline used to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement or volume.

Unlike fundamental analysis, technical analysis focuses on the study of price and volume. Technical analysis is often used to generate short-term trading signals, but it can also help assess the strength or weakness of an asset relative to the market. Information from the analysis helps analysts improve their overall valuation estimate.

Technical analysis as we know it today was founded by Charles Dow and the Dow Theory in the late 1800s. Today, technical analysis includes hundreds of patterns and signals developed over years of research.

Technical analysis is based on the assumption that past trading activity and price changes of an asset can be indicators of the future movement of the asset's price. So, it attempts to predict the price movement of any trading instrument that is subject to the forces of supply and demand, including stocks, bonds, futures, and currency pairs.

In fact, some view technical analysis simply as the study of supply and demand forces as reflected in the movement of an asset's market price. Technical analysis is most often concerned with price movements, but some analysts track numbers other than prices, such as trading volume.

Forms and market signals

There are hundreds of patterns and signals in the industry that have been developed by researchers to support trading with technical analysis. Some indicators primarily attempt to identify the market trend, such as support and resistance areas, while other indicators show the strength of the trend and the likelihood of its continuation. Commonly used indicators and chart patterns include trend lines, channels, moving averages, and momentum indicators.

A few examples of frequently used indicators:

Price trends

Chart samples

Volume and momentum indicators

Oscillators

Moving averages

Support and resistance levels

Limitations of technical analysis

A common criticism of technical analysis is that history does not exactly repeat itself, so the examination of the price pattern is of dubious importance and can be ignored.

His other criticism is that it only works in certain cases, but only because it has a self-fulfilling effect. For example, when a trader places a stop-loss order below the 200-day moving average of the price of a certain asset. If many traders have done this and the stock reaches this price, there will be a large number of sell orders that will push the price down, confirming the move traders expect.

Of course, knowledge of technical analysis offers its users an advantage in the market and is often used by professional analysts in conjunction with other forms of research.

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Flags are among the most-referred patterns in technical analysis that can provide clues to the price trend and potential next move.

In technical analysis, a flag pattern indicates short-term price movements inside a parallelogram coounter to the previous long-term trend. Traditional analysts view flags as potential trend continuation indicators.

There are two types of flag patterns: bull flag and bear flag. While their outcomes are different, each flag exhibits five key characteristics, as listed below:

The strong preceding trend (flagpole or pole)

The consolidation channel (the flag itself)

The trading volume pattern

A breakout

A confirmation of the price moving in the direction of its previous trend.

In this article, we discuss bull and bear flag patterns and how to trade them.

What is a bull flag pattern?

A bull flag is a technical pattern that appears when the price consolidates lower inside a downward-sloping channel after a strong uptrend. The said channel comprises two parallel, rising trendlines. Kindly note that the pattern could be a wedge or a pennant if the trendlines converge.

The volume typically dries up during consolidation, implying that traders associated with the preceding trend have less urgency to buy or sell during the consolidation period.

Bull flag

The urgency to jump in by new and old investors, or “FOMO” (fear of missing out), typically returns when the price breaks above the bull flag’s upper trendline, thus boosting trading volumes.

As a result, analysts view strong volumes as a sign of a successful bull flag breakout.

On the other hand, lackluster volumes when the price breaks above the bull flag's upper trendline increase the possibility of a fakeout. In other words, the price risks dropping below the upper trendline, thus invalidating the bullish continuation setup.

Trading a bull flag setup

Traders can enter a long position at the bottom of a bull flag in anticipation that the price’s next run-up toward the pattern’s upper trendline will result in a breakout. The more risk-averse traders can wait for a breakout confirmation before opening a long position. 

As for the upside target, a bull flag breakout typically prompts the price to rise by as much as the flagpole’s size when measured from the flag’s bottom.

The following Bitcoin price pattern between December 2020 and February 2021 shows a successful bull flag breakout setup.

BTC/USD daily price

As a note of caution, traders should maintain their risks by placing a stop loss just below their entry levels. That will enable them to reduce their losses if the bull flag gets invalidated.

What is a bear flag pattern

A bear flag pattern is the opposite of a bull flag pattern, exhibiting an initial downside move followed by an upward consolidation inside a parallel channel. The downside move is called the flagpole, and the upward consolidation channel is the bear flag itself.

Meanwhile, the period of bear flag formation tends to coincide with declining trading volumes.

Bear Flag

Trading a bear flag pattern

The following is an illustration of how to trade bear flag pattern on crypto charts.

BTC/USD daily price chart featuring a bear flag breakdown

In the Bitcoin chart above, the price has formed a flagpole followed by an upward retracement inside a rising parallel channel. Eventually, BTC price breaks out of the channel range to the downside and drops by as much as the flagpole’s height. 

Traders can choose to open a short position on a pullback from the flag’s upper trendline or wait until the price breaks below the lower trendline with rising volumes.

In either case, the short target is, as a rule, measured by subtracting the flag’s peak from the flagpole size.

Meanwhile, a breakdown below the flag’s lower trendline accompanying lackluster volumes suggests a fakeout, meaning the price may reclaim the lower trendline as support for a potential rebound inside the parallel channel.

To limit losses in a fakeout scenario, it is important to place a stop loss just above the entry levels. 

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The Doji candlestick chart pattern is associated with indecision in the market of the underlying asset. This could mean potential reversal of the current trend or consolidation.This pattern can occur at the top of an uptrend, bottom of a downtrend, or in the middle of a trend.The candlestick itself has an extremely small body centered between a long upper and lower wick.
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A candlestick is a type of chart used to display the price movement of a financial instrument over a specific time period. Each candlestick is composed of several parts:

The Real Body: This is the rectangular area between the open and close prices. If the close price is higher than the open price, the real body is typically colored white or green, indicating a price increase. If the close price is lower than the open price, the real body is typically colored black or red, indicating a price decrease.

The Upper Shadow: This is the line that extends above the real body, representing the highest price reached during the time period.

The Lower Shadow: This is the line that extends below the real body, representing the lowest price reached during the time period.

The Wick: This is the line that connects the upper and lower shadows. It is also known as the "tail"or"shadow."

Candlestick can be used to identify pattern and trend in the price movement of a instrument and can be used in TA

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