We want to teach you to read and understand a candle. This is super important and once you learn how to do it, you’ll make more profits! If you are a beginner, you may wonder why there are red candles and then green ones?
So, we are going to study the red candle, it is quite simple! It has levels, the first one is the highest level from there it was drawing down, at the end of the candle is where it closes. When a candle is said to have a 4-hour time frame, it means that after that time it will expire. The candle will open when a 4-hour candle expires and it will close after 4 hours. The behavior of this may be that it goes up or down at certain times and the lowest point is the closing point. Easy, right?
What does a candle tell us?
Candlesticks can indicate much more than price fluctuations over time. Older traders tend to look for patterns to get a sense of market sentiment and thus make predictions about the next moves. Let’s see what a candle can indicate to us:
– If the wick is at the bottom of the candlestick and is long, it may mean that traders are buying an asset when a price falls and the value is likely to rise soon.
– If the long wick appears at the top of the candle, it could indicate that investors are trying to take profits. And, that a sell-off of the asset is approaching.
– If the body of the candle occupies almost the entire surface and the wicks are very short at the ends, this could mean that the asset is in the middle of a major bull market.
So, being able to understand the candles for each specific asset or in certain market conditions is one of the main elements of the strategy called technical analysis.
Difference between green and red candles
What is the difference between the green candle and the red candle? The downward or bearish candles are the red candles, and the upward or bullish candles are the green candles. Remember that the thinnest parts of the candles are the lowest or highest points of each candle. So, these are very key tips for you to know what type of candles you will be dealing with. On the candlestick chart, you can find buy and sell orders.
When does it make sense to look at patterns that a candle make?
Candlestick patterns take on a special meaning when the resistance or support zone is reached. They will allow you to detect at a quick glance how the price is behaving. This means that they will be able to quickly show if the price is bouncing or simply slowing down.
Japanese candles are a very clever summary of all the information that the true price brings. So that you can carry out your analysis of the market, look at the Japanese candles and their patterns. You will be able to see the constant imbalances between bulls and bears, which are what really move the price so that it can be taken advantage of.
Once you have the basic element that is the Japanese candles and the patterns that they form, it is time to move on to the next level! This will be to discover when we have a true window of opportunity and enter or exit the market with a high rate of profitable hits.
Conclusion
Candles play a very important role in the world of trading. As mentioned in this article, a candle will be able to tell you many things and also carry out many trading strategies. We hope that the topic of Japanese candlesticks has become clear both as its main parts and its function within a certain chart.