Whenever reading price analysis or predictions for any specific cryptocurrency, you may have stumbled on the term “Candlestick”. So, what is a candlestick? When it comes to trading, a candlestick is a form of chart which shows the low, high, open, and closing prices of a specific market for a particular period of time. In other words, a specific cryptocurrency’s market performance is recorded and interpreted through candlesticks. Therefore, traders use these candlestick charts in order to predict the future price movement on past market performance.
They were first used hundreds of years ago by Japanese merchants to keep track of the price of market prices. Their usage evolved, however, and today candlesticks are also used to help traders predict the market.
Candlesticks are very useful since they are a visual interpretation of the market performance of a specific cryptocurrency. Understanding a candlestick chart is a must if you want to start trading cryptocurrencies more professionally. They reflect the price impact of investors and are continuously used by traders to determine the right times to enter and exit a trade. Candlesticks are also used in stocks, forex, and markets other than cryptocurrencies.
There are many types of candlesticks, however, the basic ones are hollow candlesticks and filled candlesticks.
On one hand, hollow candlesticks represent a period of time where the closing price is above the opening price. This means that a cryptocurrency performed positively throughout that select period of time.
On the other hand, a filled candlestick represents a period of time where the closing price was below the opening price. This would mean that the price experienced a decrease during the time the candlestick represents.
In conclusion, candlesticks represent the price performance of a specific asset during a specific period of time. Hollow candlesticks represent a bullish market while filled candlesticks represent a bearish market.
Also Read: What is Circulating Supply and Maximum Supply?
Takeaways
- Candlesticks represent the price performance of a specific asset during a specific period of time.
- Hollow candlesticks often represent a positive period of market performance for a cryptocurrency, in other words, a bullish market.
- Filled candlesticks represent a negative period of market performance, which means that they often indicate a bearish market.