What is Candlestick

Candlesticks are specific charts that investors use to track the changing prices of an asset over an interval of time.

Candlesticks could be a useful trading tool to study the conduct of an asset price. These charts are often used in the field of cryptocurrency investing to identify trends, reflecting bullish or bearish reversals.  Reversals are when markets start moving in the contrary direction. A bullish reversal is especially important because it indicates that the prices will start going up again.

A candlestick demonstrates four different prices of a stock within a definite period: the lowest price, the highest price, the opening price, and the closing price. The difference between the opening price and closing price represents the body of candlestick. The body can be red (sometimes black) or green (sometimes white), depending on whether the closing price was higher or lower than the opening price. A candlestick is a bull candle when the opening price is lower than the closing price, otherwise it is a bear candle. Bear candles are indicated by red, while bull candles are green.

The chosen period can be as short as a minute, or as lengthy as a month, depending on the trader’s choice. The colors allow the trader to visualize the market sentiment fast.