Crypto Trading: Candles Explained

Crypto trading candles, or candlestick charts, are a form of visual representation used in technical analysis to track the price movement of an asset – cryptocurrency in this case – over a specific time frame. Each ‘candle’ in the chart consists of four significant properties, namely: open, close, high, and low prices. The ‘open’ is the price at the start of the time interval; ‘close’ is the price at the end of it. The ‘high’ and ‘low’ represent the highest and lowest prices during the period. Together, they provide an overview of the price action within the selected timeframe.

The body of the candlestick represents the range between the opening and closing prices. If the close price is higher than the open price, the candlestick is typically filled or colored (often green or white), indicating a bullish period or upward price movement. Conversely, if the open price is higher than the close price, the candlestick is typically empty or filled with a different color (often red or black), indicating a bearish period or downward price movement.

The ‘wicks’ or ‘shadows’ on either end of the candlestick represent the price fluctuations outside the open and close prices, i.e., the high and low prices during the given timeframe. Long shadows indicate a significant amount of trading happened above the close price (for the upper shadow) or below the open price (for the lower shadow). Understanding these basic candlestick properties is crucial for crypto traders, as they help to identify market trends and potential reversal points, thereby informing trading decisions.