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crypto
Trading
Part 01- Technical Analysis
Introduction
Trade is a basic economic concept which includes a buying and selling of goods and services, as well as the payment of compensation by a buyer to a seller.
Trading can also refer to the exchange of goods/services between parties. Within an economy, trade can take place between producers and consumers.
Technical Analysis
Technical analysis is a trading strategy used to analyze assets and discover trading opportunities in price movements and patterns visible on charts. Technical analysts think that a security's previous trading activity and price fluctuations could be important indicators of the security's future price movements.
How does the price go up and down?
Price fluctuations are determined by supply and demand.
Technical Analysis of Market
Technical analysis aims to predict price fluctuations by analyzing previous data, primarily price and volume. By utilizing techniques such as statistical analysis and behavioral economics, it assists traders and investors in managing the gap between intrinsic value and market price.
Candlestick Charts
Candlestick charts are the most common charts in market analysis and Candlestick charts are an effective way of visualizing price movements invented by a Japanese rice trader in the 1700s.
A candlestick chart is a type of financial chart that shows the price fluctuations of currencies, securities, or derivatives. It resembles a candlestick with a vertical rectangle and wicks at the top and bottom. The top and bottom of the candlestick represent open and closing prices, respectively.
Candlesticks visualize four price levels that represent a period's trading activity:
- Open Price at the beginning of the period
- Close Price at the end of the period
- High The maximum price achieved during that period
- Low The lowest price of the asset during the period
There are 3 main parts of the candle sticks
- Upper wick /Shadow
- Real Body
- Lower Wick / Shadow
Upper wick /Shadow
The vertical line is drawn between the day's high and the closing price (bullish candle) or open price (bearish candle)
Body
That is shown by The difference between the opening price and closing prices.
It has two colors.
- Green / White
This indicates that the close price of the day is higher than the open price of the day
2. Red / Black
This indicates that the close price of the day is lower than the open price of the day
Lower wick /Shadow
The vertical line drawn between the day's low and the open (bullish candle) or close (bearish candle)
Price movement of candlestick charts
There are three types of Candlesticks
- Bullish (Green/white)
- Bearish (Red/Black)
- Doji
Bullish Candlestick -: When the close is higher than the open price
Bearish Candlestick -: When the close is lower than the open price
Doji Candlestick -: between bulls and bears, showing equality or indecision
Let's talk about Chandlestick Patterns in the next article...