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Analyze the action of prices through models of candlesticks in cryptocurrency
The cryptocurrency world is known for its volatility and unpredictability. Prices fluctuating quickly, it can be difficult to make informed investment decisions. An effective way to analyze price action in cryptocurrencies is through models of candlesticks. In this article, we will explore the different types of candlestick models used in the analysis of cryptocurrencies, their characteristics and how they can be applied in practice.
What are the candlestick models?
Candlestick models are graphic representations of price movements that transmit information on market conditions. They consist of a series of horizontal lines (Wicks) on an open graph in the currency, which represent the high and low security prices. The wicks are connected to their tail, creating a form of “candle”.
Types of candlelight models in cryptocurrency
Here are some models of current candlesticks used in the analysis of cryptocurrencies:
- Charami port: Harami pattern is characterized by two lines which converge on a peak or hollow in the same candle. The first line (the upper wick) extends above the second line (the lower wick), while the second line (the average wick) extends below.
- Hammer model : A hammer pattern consists of a small upper wick followed by a large lower wick, forming a shape of “hammer” on the graph.
- PATTERN of shooting star : A shooting of shooting stars is marked by a series of small tops upper and lower in the same candle.
- MOMENTUM Candlestick patterns :
* Rising Coin
: An ascending trend is indicated by an ascending trend line (white), a upper wick, a lower wick, then a green rectangle at the end.
* Descending triangle : A downward trend is indicated by a downward trend line (red), a lower wick, a higher wick, then a blue triangle at the end.
- Models of piercing lines of linen ::
* Long lower drilling line : a long line of lower piercing is formed when an upward trend begins to fade, indicating a potential for a new trend reversal.
* Short superior piercing line : a short superior piercing line indicates that an increased trend is approaching its end.
Characteristics of each model
Chandelle models have several characteristics that can be analyzed:
- Confirmation : The model must confirm the current feeling of the market before it can be considered as a valid indicator.
- Duration of the model
: The duration of the pattern exists on the graph is crucial to determine its validity and its utility.
- Position of the model : The moment when the motif is formed, as during a tendency inversion or after an upward trend, affects its meaning.
How to apply candlelight models
To effectively use candlestick models for cryptocurrency analysis:
- Focus on trendy markets : favor models on trend markets, because they tend to be more reliable than models.
- Mix with other indicators : Use candle models jointly with other technical and fundamental indicators to form a complete view of the market conditions.
- Stay up to date : Monitor market news and events that can affect the types of candlelight models you identify.
Conclusion
The models of candlesticks offer a precious tool to analyze the action of prices in cryptocurrencies. By understanding the characteristics and use of different models, traders and investors can make more informed decisions on the purchase and sale of securities. Although no model is infallible, the combination of candlestick models with other technical and fundamental indicators can help form a robust trading strategy.