Chapter 3 Reading The Candlestick Charts
Candlesticks charts are like a book where a trader can easily read the price from left to right.
While its not technical to read it but there is a learning curve to analyzing the chart.
Here is how to read the candlestick chart:
There are no specific rules for this, but it is preferred to start reading candlesticks from the far left until you see the first candlestick.;
For example, if you are trading in a 15 minutes timeframe, you can see the last months data, but not before that.
You should focus on the speed of the trend and candlesticks formation at the end of the trend.
Lets have a look at a practical example for a better understanding:
Here we can see the daily chart of Bitcoin, where the price started to move higher with a bullish engulfing pattern. Later on, the trend becomes corrective and moves lower. After that, the price forms another bullish engulfing, and the price moved higher and formed a new high.
Still, the best way to interpret the data of a candlestick chart is by using technical tools like a for an accurate price direction.
To read the candlestick chart accurately, you should:;
1. Use higher time frames
2. Focus on price action located at key support and resistance level
Candlestick: What Does It Say
Candlestick charts are one of the most visual cryptocurrency price charts. These charts are easy-to-read.
First of all, a single candlestick represents a certain period of time on which you are trading or analyzing the historic price changes. The candles come in two colors: green and red. Each of them indicates who is controlling the market: the bulls or the bears .
Secondly, the candlesticks are very informative. Each candle reveals four pieces of information at once. The candles body shows the assets opening and closing price. The green candle means that the closing price is higher than the opening. The red one indicates the price drop when the closing price is lower when openings.
Finally, the wicks attached to the candles body indicate the highest and lowest prices within a certain time period. The length of the wick provides us with valuable trading information. The short wick means that trading sessions happened around the opening and closing price levels. Meanwhile, long wick signals higher volatility in prices.
Candlesticks are a great tool to predict a trend. There are various types of candlestick patterns for that. However, a good trader should not rely solely on them. A good trader uses candlesticks together with the other technical analysis tools to confirm a trend and enter the market.
Bullish And Bearish Engulfing
The bullish engulfing candle pattern is a combination of a red and green candlestick where the first candle is red . After closing the red candle, a green candle appears, engulfing the body of the previous candle, and it closes above the last candles high. On the other hand, the bearish engulfing candle is the opposite of the bullish body engulfing. Here, a green candle should appear first, and a red candle should engulf the body of the first candle.
Did you know?
Engulfing pattern indicates the price direction changes from bullish to bearish or bearish to bullish as soon as the candle closes above or below the previous candles closing price.;
In the image above, we can see how an engulfing candlestick pattern forms in the market.
We can see that the engulfing pattern at a strong support level works as a vital price reversal zone in the following price chart:
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Resistance And Support Levels
In stock market technical analysis, support and resistance is a concept that the movement of the price of a security will tend to stop and reverse at certain predetermined price levels. These levels are denoted by multiple touches of price without a breakthrough of the level.
A support level is a level where the price tends to find support as it falls. This means that the price is more likely to “bounce” off this level rather than break through it. However, once the price has breached this level, by an amount exceeding some noise, it is likely to continue falling until meeting another support level.
A resistance level is the opposite of a support level. It is where the price tends to find resistance as it rises. Again, this means that the price is more likely to “bounce” off this level rather than break through it. However, once the price has breached this level, by an amount exceeding some noise, it is likely to continue rising until meeting another resistance level.
Note: False breakouts occur when a breakout happens, but the trend doesnt change. Hence, we must use some more indicators, such as trading volume, to identify the trend.
A Complete Guide: How To Read Candlestick Charts In Crypto Trading
Did you know it is possible to predict the market by reading the candlestick chart?
Of course, the global financial market can be very unpredictable, including crypto. But it is possible to understand how the market works when technical and fundamental analysis, asset management techniques are used correctly.
And of the most powerful technical tools is the candlestick chart.
This guide will reveal the ins and outs of candlestick patterns and some useful trading tips that will steer you in the right direction.
Lets dive right in!
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Despite Being Young He Has Been Intro Trading For A Long Time And Has Been Taught A
Best crypto charts for technical analysis. In this article, we list the best ethereum technical analysis charts for 2020. Their online charting tools are open to both free users and pro users. This guide covers the essentials of crypto technical analysis, crypto charts and how to read the most common chart patterns, plus an introduction to crypto trading.
There are two key levels for the rsi, the 70% and 30%. Xrpusd on the more global scale has developed this massive bullish exaggeration movement to the upside breaking out above several resistances in a fast and swift manner. Here is an overview of the best cryptocurrency software charting and trading platform tools available in the market right now for advanced technical analysis:
Almost all great trading platforms have tradingview integrated as their chart provider. Tradingview is by far the most popular charting and technical analysis tool for traders of all markets. The rsi is an analytical tool used in technical analysis that can be very helpful to understand momentum in the market.
Learn from these guys to be able to read financial charts and make your own predictions. Technical analysis can be initiated by reading these simple and visually appealing candlesticks. If you are interested in ethereum 2.0 forecasts and fundamentals, we recommend our article about the best.
Candlestick Chart Patterns
Cryptocurrency Price Prediction Charts
;Three Months Over the next three months, our NEO forecast estimates that the NEO price will head back towards the $ level. This represents a solid psychological . NEO Price Prediction Forecast for 2021, 2022, 2025 Crypto Raiders price prediction: $ – AURUM/USD forecast, AURUM price prediction, Crypto Raiders forecast. Stay up to Cryptocurrency price prediction charts. date with the . ;Dash Price Chart. Investing in cryptocurrency is far riskier than investing in bonds or ETFs thats a given. However, you can mitigate this risk somewhat by .
;A crypto coin price prediction is a guess on a price value in the future of a specific cryptocurrency. Sometimes its not more than a guess just to win social . Movie about cryptocurrencyCryptocurrency price prediction charts Coin Market Cap, All Cryptocurrency Price Charts, Historical Chart/Data, Prediction, Candlestick Chart, Widget & Many More. ;fornitureindustrialisassari.it features a diversity of crypto-related content, such as price analysis, opinions from Cryptocurrency price prediction charts. leading figures, news, stories, and guides on mining, wallets Estimated Reading Time: 7 mins.
Crypto Prices Live cryptocurrency prices, market cap, volume, supply, and more.
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Support And Resistance = Market Emotions
The biggest factor behind price movements are emotions like fear, greed, optimism, and pessimism. You can think of a price chart as a graphical representation. When the price falls down to the support level, greed/optimism kicks in and the long traders buy the asset to add to their position. Meanwhile, the short traders will buy in more to cover for losses.
Now, as more and more traders buy in, herd mentality kicks and the price raises up from the support line. Similarly, when the price goes up, fear/pessimism kicks in from the traders and they sell off their assets to make sure they dont incur any losses.
The reason why emotional price levels like support and resistance are so significant is that they attract a lot of attention and create anticipation. This attention attracts a large number of volume and traders.
There Are Three Fundamental Technical Approaches To Tackle Crypto Asset Predictions
Most predictive models for capital markets, in general, and specifically crypto-assets can be grouped in the following categories: time-series forecasting, traditional machine learning and deep learning methods. Time-series forecasting methods such as ARIMA or Prophet focus on predicting a specific variable based on known time-series attributes. Machine learning methods such as linear regression or decision trees have been at the center of predictive models in capital markets for the last decade. Finally, the new school of deep learning proposes deep neural network methods for uncovering non-linear relationships between variables that can lead to price predictions.
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So How Should We Predict The Price
The thing is, we dont need to predict anything. Since the crypto markets nature is extremely volatile, you actually cannot get the exact price of Bitcoin in two months, three days, and five hours. However, if you understand the overall market situation, you will be ready for any market changes. Moreover, you will be able to guess the future price.
How To Read Candlestick Charts Cryptocurrencies
The most basic example of how a candle can be useful is as follows: suppose that you want to buy MINA on Binance immediately after its listing. The market is still hot, so the asset is overpriced. Looking at the topmost and lowermost candle tips you can say that the market is also fairly volatile, so setting your bid, you would rather consider the low price of the latest candle or the latest cycle than the market price at the moment.
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What Are Support And Resistance
Support and resistance are crucial components to reading crypto charts and a fundamental part of technical analysis.
Support is the level where the price of an asset tends to stop falling. Meaning, the price fails to go beyond it.
Resistance is the level where the price of an asset stops rising. Its directly opposite to the support level.
Large Investors Got Into Crypto And Stayed
Until recently, crypto prices have been in the doldrums, with bitcoin dipping below the key support level of $30,000 last week.;
Amid the negative signals, one chart that has given Gradwell confidence is the accumulation of bitcoin by large investors, or those who have been holding more than 1,000 bitcoin.;
In March 2020, when bitcoin’s price halved to $4,917 from $9,160, these large investors suddenly jumped in and started buying. In the first quarter of this year, they started taking profits off the table while smaller investors started buying. This dynamic is illustrated in the chart below.;
“What’s interesting is as the price falls to its lowest level, these large investors start to come back and buy,” Gradwell observed. “And they have kept the holdings, they’ve increased them or held steady since that.”
“If they had been exiting, it would probably be a much gloomier picture,” he said. “But the fact that they are happy to stick and hold at $30,000 gives me some confidence that we at least have a floor in the price. Often bitcoin’s price rises when new demand comes, so I think we have a more positive story ahead.”
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What Is A Candlestick Chart
A candlestick chart is a combination of multiple candles a trader uses to anticipate the price movement in any market. In other words, a candlestick chart is a technical tool that gives traders a complete visual representation of how the price has moved over a given period.
Candlestick is a crucial price action tool that shows detailed information about the price, including the open, close, high, and low for a particular time frame. Still, its confused with when its compared side-by-side with a bar chart.
Heres an example of the bar chart and candlestick chart:
The bar chart and the candlestick chart may look similar, but theres indeed a difference. In a candlestick chart, the relationship between open and close is represented by the color of the body. In contrast, the bars have a single vertical line and two horizontal lines on either side of the vertical line.
When an appropriate candlestick pattern forms on a price chart, crypto traders can anticipate price continuations or reversals. Therefore, a single candlestick and a group of candlesticks are essential to define a crypto trading assets upcoming price movement.;
Bitcoin Price Prediction: Bitcoin May Trade Above $45000 Level
At the time of writing, the Bitcoin price is trading comfortably towards the 9-day and 21-day moving averages as the price establishes a new bullish signal. With the look of things, traders could see that the long-term outlook is favoring the bulls, giving the daily close produced a large bullish engulfing candle with eyes now set on the daily resistances at $49,000, $51,000, and $53,000 respectively.
However, any drop from the current level below the lower boundary of the channel could lead the king coin to the critical support levels. Therefore, in case BTC touches the low of $40,000 support, the first digital asset can rely on the long-term support levels at $35,000, $33,000, and $31,000 while the technical indicator suggests more bullish signals into the market.
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The Japanese Candlestick Charts
The graph above is the daily candlestick chart for BTC/USDT in Binance. What we are going to do now is to help you make sense out of those pretty patterns. The first thing you will notice is the red and green candlesticks lying one after another. Each candle shows you the price movement of the asset during a specific time interval.
So, what does each of these candlesticks represent?
Along with the closing price, each candle shows the opening price, the lowest, and highest price of the given time-period as well as the closing price. As you can also see, there are to kinds of candlesticks, the green candle, and the red candle.
Every candle has a body and a couple of shadows that are sticking out of it. The body shows you the difference between the opening and closing price. The shadows show you how high or how low have these opening and closing prices have gone respectively. In a green candle, the upper shadow is the close price while the lower shadow in the open price and vice-versa for red candlesticks.
The beauty of these candlesticks is that it clearly shows you exactly where the market turned and helps you identify different patterns which may help you predict how the market will act.
Having said that, lets look at three bullish and bearish reversal patterns on our candlestick graph.Bullish Reversal Patterns
The hammer is a 1-candle pattern which has:
A hammer is a bullish reversal pattern that forms after a decline in price. So, what does it exactly mean?
So What Is A Simple Moving Average
As the name states, simple moving average is the simplest form of a moving average. SMA is calculated by taking the arithmetic mean of a given set of values.
The Formula For SMA Is as follows:
SMA n = /n.
Over here, A refers to the closing prices of the asset and n the period over which it is calculated. So, suppose you have an asset and its price over the last ten days is as follows:
1, 5, 4, 2, 3, 7, 6, 8 , 9, 9
Its 10-simple moving average is as follows: /10 = 5.4.
Now, if we want to calculate the 50-day simple moving average then we will take the average of the last 50 values of that particular asset.
So, why are we calling it a moving average?
An assets closing price changes every single day. So for our asset A, if the value in the last 11 days looks like this:
1, 5, 4, 2, 3, 7, 6, 8 , 9, 9, 11.
When you calculate the SMA 10, then we drop the first value and calculate the average of the latest ten values: /10 = 6.4
We will plot all these points on the graph and plot the curve.
So, SMA 20 or the 20-day simple moving average of the Bitcoin daily chart looks like this:
The purple curve is the SMA 20 of this curve.
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Req Crypto Price Prediction
The prediction done by the crypto forecast proves that the coin will increase its price in the future, thus leading to a profitable investment. The coin will raise its value to two times the current value in the coming year.;
Moreover, holders will observe that the highest price of the coin in future will be $1.77, whereas the coins price in the next seven years will be $1.68.