According to Wikipedia, Munehisa Honma, a rice merchant during the Edo period of Japan, is considered to be the father of the candlestick chart, which was used to record the daily price of rice. After a long time of application, candlestick charts have proved effective in helping investors forecast the movement of price.
Complex as the crypto market is, we can still forecast the future price trend of a crypto through data because data don’t lie. Generally speaking, there are three basic types of market analysis available for professional traders, i.e., technical analysis, analysis on the fundamentals, and analysis on market sentiment.
The fundamentals and market sentiment are relatively straightforward. In the crypto market, analysis on the fundamentals can reveal the correlation between events behind price fluctuations, such as the status of a project team and project progress. Furthermore, it can offer insight into the development of the project or the platform and its market valuation.
Market sentiment reflects the overall attitude or tone that investors and institutions have towards a specific segment or the general market. Market sentiment in the form of data is actually the “fear index” of the traditional financial market and the crypto market. Sure enough, users can also build their analysis systems based on their investment logic.
The analysis on the fundamentals and market sentiment demands both full access to relevant information and high sensitivity, while technical analysis requires users to read candlestick charts step by step.
For candlestick charts used in the crypto market, a red candle indicates a price decrease and a green candle shows a price increase. Yet things are quite the opposite on traditional financial data websites like investing.com in regions such as Japan and South Korea. Each candlestick chart is composed of the real body and the shadow. In the following examples, a red candle indicates a price decrease and a green candle shows a price increase.
When observing the candlestick chart of a crypto asset, you also need to know something about the opening price, the closing price, highs and lows, the last two of which are easy to understand. But how can we know the opening price and closing price of crypto assets that are traded 24 /7?
Price changes can be monitored at different time frames, as set by the candlestick chart of a crypto asset.
The opening price is the first price at which an asset is traded at a given time frame. For a green candle which indicates a price increase during this period, the horizontal line at the bottom of the body is the opening price of the asset. For a red candle, the horizontal line at the top of the body is the opening price.
With the know-how, it is easier to understand the closing price. Similarly, the closing price is the last price at which an asset is traded at a given time frame. For a green bullish candle, the horizontal line at the top of the body is the closing price of the asset. For a red bearish candle, the horizontal line at the bottom of the body is the closing price.
Overall, the opening price and closing price in the crypto market are related to the time frame selected by the user to display the candlestick chart. While conducting technical analysis, the user also needs to know something about the change pattern of the candlestick chart in recent days, weeks or even months, and analyze the long-term and short-term trends of the asset by setting different “timelines”.
In a candlestick chart, a longer upper shadow or lower shadow indicates greater price fluctuation over a period of time. A long upper shadow signals a rising price. On the contrary, a long lower shadow means greater odds of a declining price. Moreover, the change of the body also extends over a period of time, depending on other data and information. When the opening price equals the closing price, asset prices are likely to reverse.
In addition to the tips mentioned above, candlestick charts have also offered a variety of useful data and indicators to help users forecast the price movement of the asset.
It’s worth noting that CoinEx also offers an option of time zones in the lower right corner of the candlestick chart. Users can keep abreast of the market and seize investment opportunities wherever they are.
To date, CoinEx has served more than 3 million users in over 200 countries and regions. Its crypto trading services are available in 15 languages, including English, Japanese and Turkish. In 2022, CoinEx adopted a new slogan, “Making Crypto Trading Easier”, in a bid to shatter the shackles of traditional finance, lower the transaction threshold and serve as an important gateway to the crypto world for global crypto enthusiasts.
Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.
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