What Are Candlesticks?

First used by Japanese rice merchants in the 18th century, candlesticks have since become a popular tool for market participants to analyse price movements and market sentiment for an asset.

Each candlestick represents the price activity within a certain time period and consists of two main parts: the body (the thicker section), which indicates the opening and closing prices, and the wick (the thinner part, located at either the top or the bottom), which shows the highest- and lowest-traded price within that time period.

They are further categorised into green or red ones: A green candlestick represents a period when the closing price is higher than the opening price, and a red candlestick represents a period when the closing price is lower than the opening price.

Typically, a series of green candles indicates a bullish move or a price increase, while a series of red candles indicates a bearish move or a price decline. For a deeper look into candlesticks, see How to Read Candlesticks on a Crypto Chart: A Beginner’s Guide.

Candlesticks can also be used to interpret trading patterns, such as descending triangles, cup and handles, symmetrical triangles, double tops, double bottoms, wedge patterns, and trend reversal patterns. For a more detailed look into candlestick chart patterns and how cryptocurrency traders use them, read our in-depth article How to Read Crypto Charts — A Beginner’s Guide.

Key Takeaway

Candlesticks are a method of displaying an asset's high, low, open, and closing prices in a specific time period.

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