A candlestick chart is the standard price visualisation tool in crypto trading, displaying four data points for each time period (1-minute, 1-hour, daily, weekly): the Open (price at period start), High (highest price during period), Low (lowest price during period), and Close (price at period end). Each period is represented by a candle body (coloured rectangle between Open and Close) and wicks (thin lines above and below showing High and Low). A green (bullish) candle means Close is above Open (price rose); a red (bearish) candle means Close is below Open (price fell). Candlestick patterns reveal market psychology: Doji (open approximately equals close – indecision), Hammer (small body, long lower wick – potential reversal from selling pressure), Engulfing (current candle body entirely covers previous – strong reversal signal), Shooting Star (small body, long upper wick at resistance – bearish reversal), and Morning/Evening Star (three-candle reversal patterns). Candlestick analysis originated in 18th-century Japanese rice markets; Homma Munehisa is credited with developing the technique. Reading candlesticks is a foundational skill for any crypto trader using technical analysis.
Example: Example: Bitcoin forms a Hammer candle on the daily chart: it opens at $65,000, drops to $59,000 during the day (long lower wick), then closes at $64,500. The wick shows bulls absorbed all selling pressure and recovered – a bullish signal at a key support level. The next day BTC opens at $67,000 as buyers who noted the hammer enter long positions.
Learn more: TradingView – Candlestick Patterns
