A candle (Candle) is a graphical way of displaying the dynamics of an asset's price over a certain time interval. Japanese candlesticks are widely used in the technical analysis of cryptocurrency markets because they allow you to see four key values for a period at once: the opening price, the closing price, the high and the low.
What a candle consists of
- The body is a rectangle between the opening and closing prices for the chosen interval.
- The shadows (wicks) are the lines above and below that show the high and the low of the price.
- The color usually indicates direction: one color means a rise over the period, another means a decline.
Each candle is tied to a timeframe, which can be a minute, an hour, a day or another interval. By comparing several candles in a row, traders identify chart patterns and try to assess the sentiment of market participants. It is important to understand that candlestick analysis reflects past price behavior and does not guarantee future movements, so it is usually combined with other analysis tools and risk management.
