Technical analysis is stock market often rejected as something more than attempts to read tea leaves. Many skeptics believe that the value patterns on the chart are random, making them wasted to track them. However, as if or not the technical analysis is about 300 years old and has been used by many traders.
The technical analysis with the Japanese rice trader Honma Muneisa originated in the early 1700s. He was the first to document and act out prism patterns; he eventually invented the candlestick chart. The trafficking stakes were his specialty, and the legend is that he made equal to $10 billion in profits.
Today we want to find out how you can first act as a businessman. Before we dive, it is important to make it clear that nothing gives financial advice in this article. This is pure for educational purposes. More importantly, technical analysis is not exclusive to the cryptocurrency market. It can be applied to any asset with high trading volume.
Understanding Candlesticks:
The first step to trading candlesticks is understanding what they are. Candlesticks visually represent price changes over a specific period. If your chart is set to hourly intervals, each candle represents price movements within one hour.
Every candlestick consists of two main parts:
- The body: represents the opening and closing prices.
- The wick (or shadow) extends from the body, indicating the highest and lowest prices during that period.
A red candle means that prices are declining, while a green candle means prices are increasing. The state of body and VV is revealed as important information about the market spirit.
Psychology behind the stock market pattern:
Candlestick patterns reflect the collective feelings of traders—real fear and greed. Honma’s groundbreaking discovery was that these feelings often follow forecasting patterns. When the price of a property begins to grow rapidly, traders feel greedy and buy, pushing prices more. Eventually, the buyers eliminate, making the fear set because the fear is set and the sellers take control.
Recognizing these patterns makes traders more efficiently estimate market movements.
Candlestick pattern types:
- Candlestick patterns fall into three categories:
- Neutral Patterns
- Bullish Patterns (Reversal & Continuation)
- Bearish Patterns (Reversal & Continuation)
Neutral candlestick pattern
- Gravstein Doji: A candle with a long upper and no one indicates very little, potential reversal for body.
- Dragonful Dozi: For a long, lower week with a candle and very few bodies, buyers walked.
- Langbenet Doji: A long-wing candle at both ends reflects the indifference of the market.
Recession Reverse Pattern:
- Shooting star: A red candle with a small body and a long upper week appears after a trend.
- Recession attachment: A large red candle puts back green lights, reflecting the sales pressure.
- Advanced block: A series of three fast candles where each subsequent candle has a small body, which.
Bullish reversal pattern:
- Reversal Hammer is similar to a shooting star, but after a down.
- Bullish connection: A large green candle attaches a previous red candle, signaling the buyer’s dominance.
- Three stars in the south: a series of three decreasing candles where the body of each subsequent candle is a small body, indicating selling fatigue.
Bulish continuity pattern:
- Bullish Three-Line Strike: Three green candles followed by a red candle that pulls out all benefits.
- Rising three methods: a strong green candle, followed by three small red lights, and another strong green candle.
- Bullish Mat Hold: A pattern where bulls maintain control despite minor setbacks.
Bearish Continuation Patterns
- BearishThree-Line Strike: Three red candles followed by a large green candle that retraces all losses.
- Falling Three Methods: A strong red candle, followed by three small green candles, and another strong red candle.
- Bearish Mat Hold: A pattern indicating continued downward momentum.
Using Candlestick Patterns in Crypto Trade:
- By analyzing the recent crypto map, we can see these candlesticks in action. For example:
- Bitcoin (BTC): ETF approval, newer pumps formed an advanced block on the weekly chart, which led to an improvement.
- Atherium (ath): Aquick, fierce pattern indicated a large rally of more than $ 1500 to $ 2000.
However, it is not enough to identify the pattern alone. This trade is important for the factor in external catalysts such as volume, market news, and regulatory development.
Reality of Technical Analysis:
Despite the utility, technical analysis is not foolish. The patterns do not always play completely due to unexpected financial events, news, and market manipulation. Rich traders and institutes know about these patterns and can manipulate them for their own profits.
To act effectively:
- Consider several timeframes: Long-term limits have more weight than smaller people.
- Factors in basic events: The news running in the market can override the technical pattern.
- Be careful with manipulation. Avoid business based on a clear pattern.
Conclusion:
Candlestick trade is both an art and a science. Although this market provides valuable insight into psychology, it should not be used isolated. Understanding the most important patterns, combining them with volume analysis, and keeping an eye on broad market trends will help improve your trading success.
If you think this article is useful, you can practice and refine your skills. The more you analyze the chart, the better you will be able to detect profitable opportunities!