Bitcoin Forum

Greetings everyone and hope you had a pleasant day. I will be sharing the little knowledge I have on introduction to charts, types of charts for newbies who are picking up into the Crypto world gradually.

And a few frequently occurring chart patterns I’m sure most of us have some form of encounter with charts but I will start with the basics first for those of us new to trading.

Like the word says charts simply give a visual representation of the market movements in currencies. Some form of summary I would say. Let’s take Bittrex platform for example. When you look at the page you see the figures changing constantly. This is the same data that gets represented on the charts. There are three types of popular charts:

1. Candle stick
2. bar and
3. line.

https://i.imgur.com/nvEtTCK.jpg

These are the ones used in the currency markets.
Personally I use the candle stick and it works for me. I believe this is preference for most traders as well and i will show you why?
The candlestick chart sometimes called the Japanese candlestick has two parts and four points. All of these are important when determining when to enter or exit.

https://i.imgur.com/LfGtUaK.jpg

The two parts are the body and shadow,
the four points are:

• the open
• the close
• the high
• the low

Although the colors differ based on the platform you are using. Most platforms use green for increasing and red for price decreasing as you can see these are the points on the candle stick.
So this is just a summary of all those figures presented in an artistic way. Have a look on the image, as i continuing. Let me explain the four candlestick points before going into types of candlesticks

FOUR CANDLESTICK POINTS

https://i.imgur.com/LfGtUaK.jpg

➡️The open is the opening price of the currency for that time frame.
➡️The high is the highest point the price of the currency reached for that particular time frame.
➡️The low is the lowest point and
➡️The close is the price at which the candle stick closes for that time frame.
Let me explain the term "TIME FRAME".
Candlesticks represent time frames. E.g. one candle
can represent 1 day, 4 hours, 1 hour etc.
Let’s take one (1) hour time frame for example since we are mostly day traders here. These four points would show the activity for a particular hour for that coin.

CANDLESTICK PATTERNS

So there are candlestick patterns and there are chart patterns. Multiple number of candlesticks come together and form chart patterns and these are strong tools in predicting movements ahead of the markets. They show what can be said as the "Body language" of the markets.

https://i.imgur.com/d0ab7ZO.jpg

Bullish candle signal that the price is going higher and Bearish candles signal that the price is going lower Please look at the image carefully, these candle are called a HAMMER The bearish one is an inverted hammer for the bullish hammer.
You look for it when prices are coming down. For the bearish hammer you look for it when prices are going up When prices are going up the hammer gets upside down. Don’t worry when i explain trends this will be a piece of cake. Just know how they look for now Don’t worry about the terms bullish and bearish So here is another image

https://i.imgur.com/cmapt9A.jpg

These are more patterns and I will explain each one in detail
No need to memorised them. You can keep it in your gallery and be looking at them as you view the charts. One important thing to note is that all of these candlesticks give an important piece of information at the right points on the chart.

https://i.imgur.com/sHVYLRy.jpg

I will take the most common ones let’s start with Doji.
The doji should not be used alone to make a decision. It should be used together with other candlestick patterns.

It shows that there is indecision in the market. It is neither closing up nor down and it can go in any direction as you can see it is neither green nor red. The same goes for its other variants as well.

https://i.imgur.com/PLDeWdG.jpg

The next one is the bullish engulfing. This shows you that those pushing prices up are winning the battle against those pulling it down. In lay man’s terms, this is a good indication that prices will go up or at least halt momentarily when seen at strong support levels.

https://i.imgur.com/kHDLTRM.jpg

This one on the other hand is the bearish engulfing. Shows those pushing prices down are winning the battle.I hope someone is getting the knowledge bit by bit don't rush reading it. I will not treat all candles but the common ones that i have seen to be more reliable. The next one is the morning star.

https://i.imgur.com/aHGg68i.jpg

This also shows prices will likely go up or halt momentarily like the bullish engulfing. When seen at strong support levels it also signals a move up.

https://i.imgur.com/6DotaeO.jpg

we have the evening star which when seen at strong resistance levels signals a move down. As you can see in both the morning and evening stars i put RT there which means Railway tracks.
A lot of times they appear without the small candle between them and appear like railway tracks which makes them easier to identify. Hammer, inverted hammer, doijs, bearish and bullish engulfing, morning and evening stars Next I will show you some charts where they appeared and were useful.

https://i.imgur.com/AnVxAZ5.jpg

If you zoom into the image you will see an inverted hammer after the move up.

https://i.imgur.com/U6lOzFF.jpg

This is btc/usdt
You can all look at it in your respective tabtraders App
All the patterns are appearing where the chart makes a turn around. It is important to note, they will not be there every time all the time. But when you see the ones you know to be reliable you know there is an opportunity, these are candlestick patterns. They are just one part of the puzzle you need to consider before placing a trade.

This is great in studying the charts used in trading, be it crypto, forex or stock trading, the line, bar and Japanese candles still are the most important part to learning how to trade, but indicators has to be learnt also.

In addition to what the OP has posted, beginners learning how to trade should also know that trading is risky and lead to either gain or loss, it has to be done without greediness and with patience. Some new traders trade with low quality mind set with no discipline but believing in luck, that is why it is not surprising new traders often lose because they do not consider these criteria.

Lastly, like I said above, these analyzing part of trading is very important but indicators like RSI, Bollinger bands and both Relative and exponential moving average should not be left out as they are also very important to analyze crypto market.

Job well done OP, but I think most of us can read chart especially that it is the simplified form of representing data being collected over a period of time. Aside from that the colors also indicates the data that been observed in the actual.

This chart topic reminds me of the statistics we had made in college days, we had so much trouble in the making for we are confused in the data to entry in the x and y axis bar. We had made some arguing but in the end we failed by our instructor. So much fun now remembering it. LOL

Newbie trader question though

I understand that having an idea about reading the parts and the know how of a candlestick is important such as wicks and interpretation of their body. However, I have watched a particular free online trading course on youtube that observing the movement of individual candlestick religiously is not recommended and is not the way of how professional trader makes a trade in the market.

Based on his explanation, it is not about candlestick but rather based on support and resistance, trends, levels, market demands or simply the accumulation and distribution. I haven't finished the course yet but i think I will understand why trading that depends on reading candlestick is not that much important.

Anyhow, thanks for the introductory part that I have missed about candlestick. Well appreciated  :)

Most persons haven't gone in to trading just because, they don't have or understand the basis such as explained in this op. It's a fine and self explanatory one I give you that.
At least now, some of us won't be so confused on what happens in the market place anymore.

These are parameters Ive often used. Honestly Im not relying on candle stick not because Im having hard time getting used to it, but the part where I applied the keypoints and never still got a good result. Anyway, there are some indicators work on our own style. As long as profit lingers on my own technique then I called it trading strategy. It depends on what method trader will used and how it works for them perfectly.

Much better termed is analyze. Since its trading aspect you need it and not just the capability to read it.

Very informative thread op, that's very helpful to newbies because when I started to try trading I didn't introduce myself in these kinds of charts when I was a newbie and I think that was my mistake, I thought it's too technical for me so I just wait for the price that I want to show in the sell order, but I didn't know it was pumping and bullish and I should have a much greater profit if I follow the chart and analyze it carefully. But now I'm using the candlestick chart because it's easier for me to know. and my tips are you should have a basic understanding when it comes to trading so you don't incur losses.

Excellent topic, you need to learn more about formatting the topic, maybe if you divide the topic, edit the pictures, and then the information will become better.
you will find more information here ---> https://bitcointalk.org/index.php?topic=1727100.0
Also, I think you need to mention the source of the images.

Knowing the type of candlesticks will not help in predicting prices, but rather will help in understanding the market now, so I think it is good to start explaining the basics of forecasting, resistance levels, Fibonacci analysis, and others.

One more suggestion from me. Although this candlestick is not very popular among traders, this candlestick is considered good to apply when market experiencing a trend conditions. One more benefit, imo,this candlestick can be functioned as a simple indicator when market condition are trending.

https://i.postimg.cc/SsCj687f/458834373-1596999662-0-97924585.jpg

https://i.postimg.cc/qvNkzz8T/458834373-1596999738-0-38484586.jpg

Technical analysis is astrology for traders. It is nonsense dressed up to look like science. It is based on conjecture and fantasy. It is unreliable and unproven. For every example of it appearing to work, there are many examples of it not working. Believers are are suffering from confirmation bias and they are selling you snake oil.

Is this sarcasm or skepticism? Or as an aspersion that arise and written, because you have a bad experience when trading using analysis that taught by an unqualified teacher?
Btw, this thread isn't talking about analysis, but talking about candlestick that are often used by many traders.

In my own say, I believe this will just give and insights to those who don't really know chart. Which is not a most to take in T.a (technical analysis) when trading but learning the basics is better than not having an idea of it.

I will add a pattern that is good to learn too, hopefully more members will add things along the way so people can learn.

3 White Soldiers Simplified

https://i.imgur.com/R37ZaAx.jpg

• This pattern consists of 3 long green candles with consecutive closes above previous low
• Each candle opens higher than the previous open and closes near the high of the day
• It appears near the end of a downtrend

---

Also learning to recongnize the trend should be among the first thing to learn so adding one more example:

Trend Line Simplified

https://i.imgur.com/ZCpmnmt.jpg

• A trendline is a line that connects two or more points on the chart, used to determine the direction of a trend
• It acts as a line of support or resistance in particular trend
• It can be drawn on a chart of any interval ( 1h, 4h, 12h, 1D...)

Learning the candle sticks has really been helpful even if we don't look at it much when we FOMO at a point signal is called out we just believe in getting in and getting out. As for the 3 White soldiers I have came across it in some coin in the market.

This topic is really interesting because some certain things I don't know how to handle has been explained excellently in trading.
This does not add value to newbies alone but for people who are ready and interested to learn trading chart only.
Understanding the movement of candle sticks in trading chart is the profit of market in crypto trading, because the market is been monitored with the movement of candle sticks for the profit and lost involved in chart.op you really tried for the topic.

I will continue in the same pattern and add a pattern (see what I did there  ;) ) that is opposite of previous Three White Soldiers one, showing you how it looks when things are turning south :D

3 Black Crows Simplified

https://i.imgur.com/agkrueu.jpg

• This pattern consists of 3 long red candles with consecutive closes below previous low
• Each candle opens lower than the previous high and closes near the low of the day
• It appears near the end of an uptrend

---

This example shows you how to recongnize the so called Fakeout or a Breakout :

Fakeout v/s Breakout v/s Retest

https://i.imgur.com/OByLRcd.jpg

• Fakeout :- A Fakeout can be seen when the price breaks the pattern, but its comes back to it.This is also called bear or bullish trap.
• Breakout:-A breakout is formed when the price barely breaks pattern and continues with huge momentum without touching the structure again.
• Retest:-A retest can be seen when the price breaks the structure and comes back to it, then bounces off of it after touching it.

Back again after travelling a while so lets continue with some more helpful and simplified series.

RSI (The relative strength index) Simplified

What is RSI - It is an indicator that can be used to determine if an asset is in overbought or oversold territory. It can range from 0-100 and it is displayed as an oscillator.

Traditional usage of RSI would look like this in general:

• 70 or above - Overbought, Overpriced, Overvalued
• 30 or below - Oversold, Underpriced, Undervalued

https://i.imgur.com/zxDzolR.jpg


RSI Trading Divergences

• There are 2 types of divergences that can occur: RSI and Price - Bullish and Bearish
• In Bullish Divergence RSI oscillator makes Higher high-Higher low while price doesn't do it.
• In Bearish Divergence RSI makes Lower High-Lower low while price doesn't do it.

 

Back again, continuing with some important candle patterns that indicate a reversal of trend, again simplified:

Some Important Reversal Patterns:

https://i.imgur.com/cPOxXoo.jpg


Hammer: Bullish

Inverted Hammer: Bullish

Hanging Man: Bearish

Shooting Star: Bearish

---

You can now take some charts and try to spot these patterns and how they manifested to learn more. I will explain some of the patterns in more details in the next posts. Until then continue learning and reading more, these posts are here just to give you a direction and then it is up to you to research further.

Images are in large size and OP can edit the image display by make it smaller. It will be better if OP can resize images before upload them in the topic.

Guideline on posting images (with size adjustments), hyperlinks (https://bitcointalk.org/index.php?topic=3974517.msg37748469#msg37748469)
[GUIDE] How to change desired image as Bitcointalk avatar size using app. (https://bitcointalk.org/index.php?topic=5206525.0)
Make this forum a better place - part 1  (https://bitcointalk.org/index.php?topic=5267135.0)

This is one of the best indicator I am using in my chart, before entering a trader or before closing our trade, the Relative Strength Index (RSI) is extremely useful.
For what I am also experience using such Relative Strength Index (RSI), the higher timeframe we are using here, the more effective it is.

Same here, but this is only simplified version as a form of introduction to RSI related to trend changes and there is much more to RSI then it is written here, but it's a good start for new trader to learn about it. Feel free to add more info on this topic if you feel like it, I wouldn't mind more people using this topic.

I introduced some bearish reversal candles in previous post in the series and now we will continue by explaining some of them as promised.


We will start with the Shooting star first:

https://i.imgur.com/J7RIKpk.jpg

• Little or no lower shadow at all
• Price closes down at the bottom of the candle, around 1/4 of the candle
• Upper shadow is usually biggest part of the candles body, about 2 to 3 times the lenght of the body

---

How to interpret this pattern:

• As the market opened the buyers pushed the price high, most likely to resistance confluence.
• The bears react and start selling pushing the price back down creating a selling pressure.
• Bear pressure becomes to strong and they overwhelm the bulls buying power.

So as a conclusion: Shooting star indicates a possible bearish trend reversal and that sellers are starting to come to market and started to sell aggressively.

The candle stick! Whom ever invented it is quite a genus. It's the best way to speculate what price action is doing in the market and using it in combination with RSI, some other indicators that might suit you and on a better time frame, your price equity is sure to get better.
Candle sticks presents an opportunity only if you care to read meaning in every candle that builds up on the chart.

Continuing with the new pattern, bullish reversal pattern The Hammer :

https://i.imgur.com/CXpqcVI.png

• Little or no upper shadow at all
• Price closes up at the top of the candle, around 3/4 of the candle
• The lower shadow is usually biggest part of the candles body, about 2 to 3 times the lenght of the body

---

How to interpret this pattern:

• As the market opened the sellers took control and drove the price down, most likely to the support confluence.
• The bulls react and start buying, pushing the price back up creating a buying pressure.
• Bull pressure becomes to strong and they overwhelm the bears as the buying momentum was so strong that the closing price was higher then the opening price.

So as a conclusion: The hammer indicates a possible bullish trend reversal and that bulls/buyers are starting to come to market and started to buy strongly again.

Just in time with the hammer explained
It happend yesterday  :D

What a weird coincidence  ;) Indeed  ;D

To be honest, I was waiting for the opposite scenario, a big dip, but -> bitcoin :)
Unpredictable hehe