Support levels in charts refer to a price level that the asset does not fall below for a fixed period.
Understanding support and resistance are one of the most crucial parts of reading a crypto chart. Markets often move sideways to wedge back and forth until they move into a firm direction. They appear when a trend starts to settle down and finally results in a breakout. The pattern that is formed in the above image is a wedge. Popular patterns for technical analysis Head and Shoulders A shooting star candle pattern indicates drive-by buyers which are met by resistance. This pattern consists of a candle with a long upper wick and a small body, as can be seen in the image above. The upward trend must be confirmed by watching it closely for a couple of days and the reversal should also be validated by a rise in trading volume.Ī shooting star candle pattern is a bearish reversal pattern that occurs at the height of a rally before reversing down.
The body of the candle is short which represents the head of the hammer while the longer wick is a sign that sellers are driving prices low during a trading session, which would be followed by strong buying pressure to end the session on a higher dose. For instance, a Hammer Candle Pattern is a bullish reversal pattern which tells us that a stock is nearing bottom in a downtrend. Patterns formed on the charts fall into two categories: Bullish Reversal Patterns and Bearish Reversal Patterns. Depending on the shape, colour and size of the candlestick, traders take positions or make changes in their trading strategies. These candlestick charts form several patterns. This indicates that the asset’s price rose. In contrast, the green candle shows that the closing price was greater than the starting price. This means the price of the asset declined.
To interpret the image above, you should be aware that a candle is represented in red when the closing price is lower than the starting price during a specified time frame. A Japanese Candlestick is among the frequently used charts by crypto traders.
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