Crypto Academy Season 4 Beginner's Course-Task 10: Candle Stick Patterns
1a) Explain the Japanese candlestick chart? (Original screenshot required).
The Japanese candlestick chart is a graphical depiction of the price of a token, stock, or other item that can be bought via the internet. The Japanese candlestick has a graphical representation in the form of a chart, which may be useful for assessing an asset's up or down trend.
Munehisa Gonna, a Japanese rice merchant, invented and executed the Japanese candlestick chart in the 1700s. The Japanese candlestick chart is a popular tool for anticipating a token's trend and is utilized in a variety of industries.
Traders use a Japanese candlestick chart to help them decide whether or not to purchase or sell an item. The chart is an important part of any asset's technical analysis for determining its future trend. The Japanese candlestick chart is also utilized in cryptocurrencies, where traders analyze the candlesticks to detect a crypto's trend and make judgments based on the information provided.
b) In your own words, explain why the Japanese Candlestick chart is the most used in the financial market.
• Candlestick talk is mostly utilized in the financial sector since it is seen as a visual depiction of what is going on there.
• • We may obtain important information on the open, high, close, and low of the price using a candlestick, which can offer a clue or tip on price movement.
• Candlesticks are adaptable; they may be employed on their own or in conjunction with other technical indicators such as momentum oscillators and moving averages.
• • The presence of candle patterns aids the trader in determining when to enter, depart, and remain out of the market.
c) Describe a bullish and a bearish candle. Also, explain its anatomy. (Original screenshot required)
BULLISH CANDLESTICK
The bullish candle is a Japanese candlestick that indicates a strong market demand. It opens immediately following the previous candle's closure. This candlestick closes higher than the open.
ANATOMY OF A BULLISH CANDLESTICK
The body which is the range between the open and the close of the candle is made up of four parts which include;
THE HIGH: The high is the maximum point attained by the candle before closing at a point below it. It is regarded as the shadow of the candle.
THE LOW: The shadow of the candle is another name for this. The candle has reached its lowest point. It is situated beneath the candle's entrance.
THE OPEN: The open is the moment at which a new bullish candlestick appears after the preceding one has closed. It indicates the beginning of a new price movement in that time range.
A bullish candlestick's open is positioned below the candle's close.
CLOSE: This is the moment at which the price movement comes to a halt. The asset's most recent value at a given point in time.
BEARISH CANDLE
The bearish candlestick body, which is the range between the opening and closing points of a candle, is made up of four sections, similar to the bullish candlestick body.
ANATOMY OF A BEARISH CANDLESTICK
HIGH: A bearish candle's high is the highest height achieved by a bearish candle, as seen in the figure above. This position is generally higher than the candle's opening point.
LOW: A bearish candle has reached its lowest point. The low is usually formed below the candle's closing point, just like the high.
OPEN: This is where a fresh bearish candle begins to form. It denotes the beginning of a negative price movement at a specific point in time.
CLOSE: This is the asset's most recent price point at a given time. It denotes the end of a negative price trend in a specific time range.
Conclusion
For a long time, the Japanese candlestick has been used in the market. Its efficacy in anticipating market price movements has made it popular among traders and experts.
It was also the most popular among newcomers to the financial market due to the ease and self-explanatory nature. The Japanese candlestick chart, on the other hand, is used in conjunction with other technical analysis tools and a variety of other indicators to ensure accurate trend forecasting and help traders make informed trading decisions.
Thank you for reading this, and thank you to Professor @reminiscence01 for this idea lecture.