The Foundation of Trading
Before you can begin to master complex patterns or oscillators, you must first of all understand how the Japanese Candlestick works . Every candle tells a story of a battle between both buyers (bulls) and sellers (bears) over any specific period of time.
The Anatomy of a Candle
Each candle consists of three main parts:
- The Body: The thick middle part. It shows the range between the Open and Close prices.
- The Wick (Shadow): The thin lines above and below the body. These show the High and Low prices reached during that time.
- The Colour: Usually, Green means the price closed higher than it opened (Bullish), and Red means it closed lower (Bearish).
Why Candles Matter in Crypto
In a volatile bull cycle, candles help you spot “exhaustion.” For example, a long wick at the top of a candle suggests that while buyers pushed the price up, sellers also fought back .
Three Common Beginner Candles
- The Marubozu: A solid body with no wicks. This shows total dominance by one side.
- The Doji: A candle with a tiny body and long wicks. This represents indecision in the market.
- The Hammer: A small body at the top with a long lower wick. This often signals a price reversal is coming.
