Reading Candles on Crypto Charts

Kudos to you if you have managed to purchase and own some Cryptos. You obviously have a strong interest in changing the way you view money, saving, earning, and spending.

Likely too you have been to various exchange sites with Charts, numbers, strange looking images, and numbers. Do not let these odd-looking characters frighten you off!

Stay with me and maybe we can at least gain a working knowledge in how to read them.

Please understand this blog is not designed to guide or teach anyone to make buy and sell decisions. It is just an attempt to describe what you see on almost every exchange site where you go to trade your cryptos. Becoming successful as a trader and focusing on what you earn as your main income takes a LOT of comprehensive study and practice. This includes watching market behavior, chart patterns, indicators, trading strategies, and even risk management. Do not get lulled into believing trading is something that you can get into without a lot of demanding focus. Generally, it takes a year or more of learning and practice, and even then, it should NEVER be seen as a “get rich quick” scheme.  You should note that the vast majority of traders actually lose money, and unsophisticated traders are unfortunately likely to lose ALL their money.

Of course, the better armed with the understanding, the better off you are in anything; trading is no exception by far! So, let us start with a basic understanding of some factors in the charts. Gaining some basic understanding of the charts, candlesticks, etc., will help you make informed decisions for long-term strategies and investments and decide on your entry and exit points.

When studying a chart, you will notice they are viewable in various time frames. You can choose to see data displayed daily, weekly, monthly, or even displayed in very recent blocks of time, such as one hour, 30 minutes, or even 5-minute reports. Should you wish, you may adjust the candlestick to increase or decrease the time gaps.

Let us focus on 2 basic components in the chart: the candlestick and volume.

How To Read Candlestick Charts

The “candlestick” typifies what prices a coin or crypto is traded for at a certain time frame. Looking like a vertical rectangle (the widest part of the candle) with another two thin lines adjoined that reach up and down. You can tell by the length of each candlestick the opening market price, the high, low, and closing price of the crypto. The vertical rectangle is known as the “real body” and describes the trading activities between opening and closing prices. In other words, should the opening price be higher than the closing price for that crypto, you will see that represented at the top of the “real body” and the closing price represented at the bottom. You will generally see a “red” candlestick. . A green candlestick would mean, therefore, that the price of the crypto went up in the interval of time, and the opening price was lower than the price at the close.

The two thin lines that run verticle from the candlestick’s real body represent the highs and lows of the prices for a particular time interval. They are called upper and lower shadows or wicks. The vertical lines that stick out from the real body reflect the high and low prices for the time period. They are known as upper and lower shadows or wicks.

Understanding a Candlestick Chart

You could see candles take various shapes over a certain interval of time-based on specific price changes. These candles’ shapes take on many imaginable shapes from thin bodies, large bodies, short wicks, long wicks, and even NO wicks, depending on prices. Some specific candlestick formations are thought to have symbolic properties for indicating the given timeline’s price action. Notwithstanding, we should look at a full range of these candlesticks to understand the broader scope of a coin’s price so we can begin to discover patterns. Such symbologies could provide possible insight into market sentiment and facilitate investors’ making wiser enter and exit trade decisions.

Support, Resistance, and Trend lines

Now that you have a basic understanding of the candlestick symbol’s structure and how various patterns can create expectations and probabilities of which direction the price may be going, let’s step on to some basic concepts and understandings of chart interpretations. Some terms you may hear used in price analysis discussions are support, resistance, and trend lines.

Start to mentally visualize that support functions as a floor and resistance as a ceiling in a room. Now think of a ball as the price bouncing up and down: it will bounce off when it hits the floor or ceiling. The support and resistance “lines” have an equal effect on the price of a cryptocurrency. Generally, those support and resistance lines can be easily recognized on a chart. A trend line shows you the direction of where the price has been going thus far, and they are specific forms of support and resistance. Therefore, it can show either an uptrend (when the price bounces off in an upward trend) or a downtrend (when the price bounces off the trend line in a downward trend).

How Volume Works

Trading Volume is determined by how many cryptos were exchanged in a given time. This could give another view of the price action that you get from looking at candlesticks. Roughly is can give a hint of the enthusiasm buyers and sellers are displaying in the market. Price changes with similarly high volume could indicate a more reliable signal of the price activity. Increasing or decreasing volumes, partnering with various other chart patterns could also indicate a future price movement. However, keep in mind that crypto markets (especially in the lower-ranked cryptos) tend to experience lower trade volumes. Hence, it is easier for whales (big players) to manipulate price movements. This is because it takes less money to change the price. Also, keep in mind that BOT trading and particular trading models (no fee trades or paying traders for making trades) could distort the reality.

Volume bars are typically located beneath the candlesticks and share the same colors: red shows that the price has decreased in the previous time period. Green indicates that the price has increased in the previous time period.

Forex Volume indicator: effective control of volumes for ...

Disclaimer:

This article was written with the sole intention of education, without any guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a part of your own research. Nothing I write in any of my blogs is intended as investment advice or an indication to buy/sell/hold anything. Cryptocurrencies are inherently risky, so you should never invest more than you can afford to lose.

About the author

Born in Illinois and the third oldest child of 10 children. Gail learned many lessons in life that would serve her well in her future. Patience, sharing, compassion, understanding, love, and acceptance were a way of life. Family is significant to Gail as a mother of three herself.
Gail lives by the motto "live and let live," and she takes pride in helping others. Educated, yes, but believes life is the best teacher and learning depends highly on an open mind.

Comments

  1. Good Read Gail, I have been learning candle trading for a few years, so much to learn as the dynamic’s and the volume grows with leaps and bounds along with the nudges of unseen forces that can wreck a good plan. This is so new to most it becomes overbearing consuming much time and effort. Traders are not born, but grow with experience and knowledge from self training, and losing funds along the way. When I first started trading BTC there was not a lot of info, it was a ” gamble” that has morphed into the many diverse trading sites to teach one to cut their losses a great deal. Of course most trading schools charge a fee, I believe one must do to avoid the holes that suck up your BTC, and we know how that feels. “Common Cents” go a long way in trading; we need to have a lot.

  2. Thanks for this article, Gail. I wish I had read this information several years ago and had been able to put it into practice. Now that you have given us a road map to crypto trading, I hope a lot of members educate themselves and start understanding the market. I plan to print out your article and find other information to help me follow the market. It will be a long time before I go live on trading. Thanks again for this eye-opening information.

  3. Not ever having heard the term “candles” used other than to describe the wax candles with which we decorate or light a room, this article lit up my brain and casted light on something new.

    Thank you, Gail, for sharing this information. Sophye, the author, did a good job making this easy to understand for the beginners (the Homers as one of my friends likes to say).

  4. Thanks for the primer on how to read candles and what they mean. I am new at this and love finding out about Crypto, and you put them in straightforward terms where a novice like me can understand. I appreciate that as I can begin to get some clarity now.

  5. Lovely article, Gail!
    After buying some cryptocurrency, my focus towards money has changed.
    I find digital currency very practical and convenient to use.
    Candle trading is a totally new concept for me and something that I would like to pursue and hopefully be successful at it!
    Bullish and bearish tendencies in cryptocurrency are always to be found. This is part of the process.
    As Gail rightly said – a lot of comprehensive study and practice are required to earn money in trading.

  6. Thank you Gail,Very interesting as always,there is always something to learn from your
    blog.
    Candle trading is a bit different but maybe easier,new to me,I don’t think trade should be done unless we practice a lot,given the price movement of crypto, trading is like losing your crypto without practice,but I am trying my best to learn it through the net with the hope that one day I will be able to trade in compumatrix dex,Thanks Gail for teaching me such a great way to trade.

  7. very good information and learn learn learning we go — which in this information age and electronics era –getting great material from many around here has been such a benefit to me and with each read here I get more better acquainted with so much — thank you very much !!

  8. I like the fact that they come in different colors (usually green/red) these days and are pretty easy to follow.
    Didn’t care much for the black and white candlesticks that were before.
    To minimize your loss, you should always follow the buy low and sell high rule..And also consider trading a longterm thing rather than a short term one. The numbers fluctuates a lot over a year for instance.

  9. Great read Gail and valuable information. Trend lines and candlesticks knowledge are key to being able to make the decision to buy or sell. Focus is also a must for frequent trading. One must watch what is going on, read the candles, decipher what they are telling us and them make moves. Not an hard skill to learn, but mastery is key and that takes practice.

    Holding is a bit different and one must then know the reason for the crypto. What use it has for the world and how well it will be adopted. Nothing is written in stone, but knowledge of what one is holding is so important.

  10. Thank you for that comprehensive information concerning how to read a crypto chart. I must confess that I thought I would like to blow those candles out:) but, what is so great if trading seems so out of our wheelhouse is that Henry has thought of everything, and we will have the option of working with a VA (virtual assistant) to help us trade. Though being an information gatherer I still am grateful to save and file this way – who knows what could happen 🙂

  11. Gail, you always come up with interesting and educational articles. I am always impressed with your knowledge and understanding this business.
    I am learning, little by little, how all of this fits together, but this old brain finds it difficult to assimilate so much information. I will keep plugging along hoping that I comprehend at least most of it.

  12. Thanks Gail for this clearly laid out explanation of a candle. Knowing this information can certainly assist an investor who is studying an investment for the purpose of sinking funds in or whether it should be sold!

  13. Very good article and as Gail indicated it is not a lesson on how to trade. There is an entire pseudo-science in interpreting graphs and it seems like every professional trader has his/here own twist on how to do it. I read an article yesterday from a trading professional who was trying to explain his theory on why he thinks silver is going to explode in the very near future. By the time I finished the article, I was in severe pain from a headache. The lines and angles he introduced with varying understandings of what they meant was meant for a PHD in math, geometry and mind reading. Needless to say I did not understand what the heck he was saying. My personal experience with trading, of any type, boils down to one simple scenario and it works every time…if I buy, the price immediately goes down and if I sell, it goes up. If I do nothing, I save a few bucks.

  14. Great Blog Gail. I’ve purchased some BTC, XRP, and Dogecoin and I’m holding them within my wallet and hoping the values will continue to increase. I’ve never been interested in trading as I don’t have the time or brain cells to try to learn, so I will leave the trading to those who know what they are doing. I’m so excited and eager to partner with a VA to give them a job and allow me to earn without having to run the risk of making mistake and losing my money in the process.

  15. Great blog Gail as always, you have a very easy way to explain the new trading language for the beginners, I liked you paragraph regarding (how to read candle stick chart). (Candlestick) typifies what prices a coin or crypto is traded for at a certain time frame, also the (Real body) describes the trading activities, the (Red) and the (Green) and (The two thin lines) called upper and lower shadows or wicks which reflect the high and low prices for the time period. very concise and easy to follow.

    A very good teacher.

  16. Very interesting article and well written. I was very impressed that this graph made sense to so many. I am so happy that we have VA’s to help us and hopefully help me to understand how this works. Then as time goes on I will be more educated in the trading. But I will hope to always have my VA doing this job for me.

  17. I never thought I’d say this about something I consider to be a bit “dry” (trading in general), but this is kind of fascinating information! You’ve explained it well, in my opinion, and now when I see any chart, for whatever reason, I will at least have a deeper knowledge of what is going on with the movements of the different “forms and figures). The drawing of the two forms of “candles” is very succinct, and I do believe I understand this now, in a VERY basic way, but much more than before. Thanks for explaining this, Gail!

  18. Great article Gail on using Japanese candlesticks to read crypto charts. I have learnt to enjoy setting these charts up on the MT4 platform and reading them as you have presented as well as using other available tools provided by MT4 to help interpret their performance over time. I’m also slowly using this tool to paper trade and hone my trading skills.

  19. Thanks Gail for another formative blog,, very helpful . I have always had a hard time to understand the candle sticks on the Dex trading Platform . Over time it became clearer to me ,but takes much ,much ,longer to figure it all out when one is learning on their own. I had to go to YouTube to learn what I needed to know.

  20. Thank you for this interesting blog Gail. For me, trading is something that I don’t understand completely so I keep away from it. For that reason, it is very good that I can ask for the help of a Virtual Assistant to do the trading for me. The chances of success are much higher if I use the services of the assistant.

  21. Thank you Gail for posting this information. It was always a blur when looking at the potion of the reporting section. But now there is some clarity of what it all means. One should copy that information and submit it to memory. Informative post Gail…thanks.

  22. Thank you Gail for a decent ,short Primer on Candle stick charts . Emphasizing to also watch very carefully the Volume at any given time and thus judging the trend and to take appropriate action.I have been learning all about theses charts and there is a ton of info imbedded in these charts.It takes time to learn and then use these charts to our advantage while trading.

  23. Gail very educational and informative blog.I did not know that the word candlestick is used in trading crypto,it’s something new I learnt today. Now I will not be ignorant and daft whenever there is a discussion about it.I am so glad that Henry did think of people like us ,so we can use the VAs for trading. I just know that there is very less empty grey matter left in my brain

  24. Gail, this blog gave me more understanding of the trade screens. I am learning more and more from your blogs. My knowledge of trading is improving, and I look forward many years from now to trying my hand. I definitely have confidence in VA’s. I will use VA’s as my trade arm as well as other tasks that fit their abilities. It is satisfying to have choices.

  25. Thank you for this blog Gail. It is a subject that I don’t understand and I really want to stay away from this. If I would start using this with trading I think I would lose money. So for me, it is a very good thing that Compumatrix came with the Virtual Assistants. It seems that they are very well trained to do the job for me.

  26. Gorgeous information right there that I wish I had got my hands on some several months back. It critically points out to me that traders are not born but they grow through experience, research and boundless practice! Money lost happens, but it’s what you do after that that matters with the information based on the candle stick and others that matters. How you have expounded about the candlesticks has opened up my mind as to how to read, analyze and place a trade based on the bullish or bearish market movement. Much appreciated with application into action!

  27. Interesting read Gail, many years ago when I was trading in the stock market I bought a book on charts and how to read into it; to this day, it remains a mystery and it is a science by itself. Very difficult for me to understand or read charts, but non the less very interesting. I would never again trade by myself, that is left to the experts. Your blog does give very good information and something for me to try to understand.

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