Technical Analysis: Candles part 1

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Introduction to technical analysis

Candlesticks are a popular tool used by traders to analyze financial markets.

They provide valuable information about the price movement of an asset over a certain period of time.

In this blog post, we’ll cover the basics of the anatomy of candlesticks, including bullish and bearish candles, opening and closing prices.

Bullish and Bearish Candles

The body represents the price movement between the opening and closing prices, while the wicks represent the high and low prices during the trading period.

When the closing price is higher than the opening price, the candlestick is considered bullish (green candle), and when the closing price is lower than the opening price, the candlestick is considered bearish (red candle).

The meaning of wicks

The wick, also known as the shadow, is a component of a candlestick that is distinct from the body of the candle. It provides information about the range in which the price of an asset moved during the time period represented by the candlestick.

The meaning of the body color

Viewed as a complete object, a candle represents the conflict between buyers and sellers. If a candle closes with a green body, it indicates that buyers put pressure on sellers and overwhelmed them. If a candle closes with a red body, the opposite is true.

The tip of the iceberg

With that said, we have only scratched the surface of technical analysis. There is much more to technical analysis than simply looking at a candle itself. However, a candle can reveal a lot of information as well. In the next blog post, I will delve deeper to provide you with a better understandind of candles.