What is a candlestick in a crypto chart?

A candlestick shows the change in the price of an asset over a period of time. As the basic indicator in a crypto chart, each candlestick represents a specific price movement, including the opening and closing prices, as well as the highest and lowest price points.

What does a red candle mean in crypto trading?

A red candle shows that the closing price was below the opening price. If a candle changes to green, the price of the asset increased and closed above its opening price. As time progresses, multiple candlesticks create larger patterns that crypto traders derive signals from to make vital trading decisions.

Who invented the candlestick chart?

The candlestick chart was invented in the 1700s by a Japanese rice trader — Munehisa Homma (or Homna, also known as Sokyu Honma or Homma). He used the candlestick elements (Open High and Close Low) to represent the prices in a trading period. Today, almost all financial markets rely on candlestick charts for price representation.

Why do traders use Candlestick charts?

Traders use candlestick charts to represent an asset’s price evolution. Candlesticks derive their name from the long lines (wicks) and rectangular shapes they employ to denote price action within a specified timeframe. With candlesticks, you can get clues and insights from the price action as well as the general mood of the market for that asset.