Zoom on Japanese Candlesticks

Zoom - Japanese Candlesticks

By Crypto Nation – 06 December 2020   

Japanese Candlesticks are the most common form of price display in trading. They are composed of a body, and wicks.

By default, a green candle indicates a price increase. Conversely, a red candle results in a drop of the price.

This display format is the most complete, because a single candle gives us 4 pieces of information :

  • The opening price.
  • The highest price reached.
  • Conversely, the lowest price reached.
  • And the closing price.

Japanese candlesticks are used in Technical Analysis (TA) of a market to represent price changes. Technical analysis over a past period is supposed to give indications on the future direction of the market or a price.

We then distinguish several types of Japanese candlestick figures, the most common being:

  • Marubozu: Indicates a strong impulse.
    • Its body is full.
    • it has no, or very small wicks.
    • It can be bullish or bearish.
  • Doji: Sign of hesitation.
    • it has no body.
    • its wicks are long.
    • There are several types of Dojis, but are always hesitant.
  • Spinning Top: Sign of hesitation.
    • Almost no body.
    • The wicks are long.
    • Similar translation to Dojis, we see hesitation.
  • Hammer: Translates into a sign of bullish impulse.
    • Defined by a small bullish body.
    • With a long wick down, without wick up.
    • Can also be compared to a rocket.
  • Shooting Star: Irregular pulse sign.
    • Has a small bearish body.
    • With a long wick upwards, and without a low wick.
Candlestick Cheat Sheet

Credit : Binance Academy

Explanatory video

Below, you’ll find a detailed video on the technical analysis of Japanese candlesticks, made by our partner Zone9. This content is in French.

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