A Closer Look at Candlesticks: Learn about another type of chart pattern and how it helps traders identify trends and prices.
What are Japanese Candles?
Candlesticks are a common type of chart that helps traders identify the prices of relevant assets, i.e. the open, high, low and close prices (known as OHLC prices) within a defined and constant period of time.
A candle is made up of two parts. The shadow, also known as the wick of the candle, represents the lowest and highest prices, while the body represents the difference between the open and close prices for the period. The color of the candle indicates whether the observed period is an uptrend or a downtrend. On the BitMEX platform, bullish trends are shown in green and bearish trends are shown in red.
periods: When observing candlestick charts, traders should always define an observation period for each candle, whether short-term or long-term. For short-term observations, typical durations are 5 or 15 minutes. For medium-term observations, 1-hour candles are most common, while for long-term observations, 12-hour or one-day candle periods are common.
If the candle shadow is very extended, the trader will have different price expectations for that period and can test these expectations later. If the shadow is very close to the candle body, the price movement of the candle becomes an indicator for the next period.
Anatomy of a Japanese Candle
What does a bearish candle look like?
What are the characteristics of a bearish candle?
- Red for BitMEX.
- The opening price is higher than the closing price during the period.
- The longer the red body, the more bearish the price action.
What does a bullish candle look like?
What are the characteristics of a bullish candle?
- Green color for BitMEX.
- The opening price is lower than the closing price within the period.
- The longer the green body, the more bullish the price movement.
Later we will explain the different types of Japanese candle patterns, especially bullish ones.
Theories aside, if you want to start trading cryptocurrency derivatives or find spots on BitMEX, you can find all the existing products there. here. For more educational materials on BitMEX trading, especially derivatives, please visit: this page.
To be the first to know about new listings, product launches, giveaways, and more, we invite you to join us on: online community Connect with other operators. For the latest information, you can also follow us on: Xor our blog why Advertisements on the site.