Have you ever heard of a candlestick chart in the crypto world? Are you a beginner? This article is for you!
First of all, what is a candlestick chart⁉️
A candlestick chart is a financial chart that graphically represents an asset’s price moves for a given timeframe. The candlesticks can represent virtually any period, from seconds to years.
While candlestick charts could be used to analyze any other types of data, they are mainly employed to facilitate the analysis of financial markets. Used correctly, they’re tools that can help traders gauge the probability of outcomes in the price movement. They can be helpful as they enable traders and investors to form their ideas based on their market analysis.
How does a candlestick chart work?
Four vital price points that are required to be determined;
• Open price: The first recorded trading price of the asset within that particular timeframe.
• Highest price: The highest recorded trading price of the asset within that particular timeframe.
• Lowest price: The lowest recorded trading price of the asset within that particular timeframe.
• Last price: The last recorded trading price of the asset within that particular timeframe.
The relationship between the open, high, low, and close determines how the candlestick looks.
Having said all these things about this currency movements tool, does this really help intermediates and beginners⁉️
Many traders consider candlestick charts easier to read than the more conventional bar and line charts, even though they provide similar information. Candlestick charts can be read at a glance, offering a simple representation of price action.
As an answer to the question above, yes! These candlestick charts can be helpful in estimating and analyzing movements in the market.