Hello Crypto Friends!
Thank you to all my followers and welcome any new people to this blog!
Today we will go over candle stick formations and how to analyse them.
A candle is formed by an open and close of price over a time frame, on hourly chart =1 hour etc.
The open of the candle is the price of the previous candle's close.
A green candle means the price closed higher than it opened and vice versa for a red candle.
A wick means the price went up or down to that price but did not stay there.
Lets start with the Engulfing Candle -
Here are the two types of engulfing candles. A bullish engulfing candle is a large green candle with a large solid body which is longer than the previous red candle and vice versa.
These normally have implications that the trend is going that way. It tells you that the buyers/sellers have a lot of strength.
Next is the DOJI Candlestick -
There are many types of Doji, you can read an in depth article about each type here - Doji Candlesticks
A Doji is a candle with a large wick(s) and small body. These normally imply that the market is reversing or that there is heavy resistance or support in that area.
If you use the Heikin Ashi Candlesticks, a Doji candle implies a reversal is very likely.
As you can see the small green Doji lead to a sell off, and the long wicked green Doji was followed by a big green candle.
Next is the Shooting Star -
This candle has a relatively small green body and a large wick up. It tells you that sellers are in control and can imply a reversal or continuation of downtrend. You can see here what happened after the daily closed on a shooting star.
The opposite to that is the Hammer -
So much like the shooting star except in reverse, the hammer candle is normally relatively small, and looks like a hammer. It has a wick below and a small body above it. Implies the price will continue up afterwards.
There are a lot more candlestick formations and strategies out there, but i thought i would just cover the basics. Knowing your candles lets you read the chart more accurately and make decisions on your trades.
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