Candlestick Chart
A price chart that shows an asset’s open, high, low, and close over repeated time periods.
A candlestick chart is a common way to display cryptocurrency price movement over time. Each “candle” represents one time interval, such as 1 minute, 1 hour, or 1 day, and shows four prices: the open, high, low, and close. The thick body shows the range between the opening and closing prices, while the thin lines, called wicks or shadows, show the highest and lowest prices reached during that interval. Colors often indicate direction, such as green for a close above the open and red for a close below it.
Traders and analysts use candlestick charts because they make market behavior easier to scan than a simple line chart. A line chart may only show closing prices, while candles show volatility and intraperiod swings. For example, a candle with a long lower wick can show that sellers pushed the price down but buyers later drove it back up. Candles are often used with volume, trend lines, and indicators to study momentum, support, resistance, and possible trend changes.
Other terms in Technical Analysis
Bollinger Bands
A volatility indicator that plots bands around a moving average to show when a crypto asset may be unusually high, low, or entering a volatile period.
Bullish Divergence
A bullish divergence is a chart signal where price makes lower lows while an indicator makes higher lows, hinting that selling pressure may be weakening.
Fibonacci Retracement
A charting tool that marks possible support and resistance levels based on Fibonacci ratios after a price move.
MACD
A momentum indicator that compares moving averages to help traders spot possible trend changes in a crypto asset’s price.