Candlestick
A candlestick shows how the price of a cryptocurrency moved during a chosen period. It displays the opening, high, low, and closing prices.
What is a candlestick?
Each candlestick represents one time period, such as five minutes, an hour, or a day. A chart with many candlesticks makes price movements easier to follow.
The wide part is called the body. It runs from the opening price to the closing price. The thin lines above and below it are called shadows or wicks. They show the highest and lowest prices during that period.
A green candlestick usually means the price closed higher than it opened. A red candlestick usually means the opposite. Colors can vary by platform. A candlestick also continues to change until its time period ends.
An example of a candlestick
Imagine bitcoin opens at €50,000 and reaches €51,000 within an hour, briefly drops to €49,500, and closes at €50,500.
The body runs from €50,000 to €50,500. The lower wick reaches €49,500, and the upper wick reaches €51,000. Since the closing price is higher than the opening price, the candlestick is usually green.
Why are candlesticks important in crypto?
Crypto exchanges use candlestick charts to show the price of a trading pair, such as bitcoin against the euro. That's why you often see them when checking a cryptocurrency's price.
Candlesticks are used in analysis and market updates to describe price swings, trends, and possible reversals. The chosen time period matters: a rising hourly candlestick can be part of a falling daily candlestick.
A candlestick doesn't explain why a price moved or predict the future with certainty. Different price movements can also produce the same candlestick. Patterns can give false signals, especially when trading volume is low or prices are swinging sharply.
