Candlestick

Candlesticks consist of two parts. The first is the body: the wider central part, which represents the range between the opening and closing prices. The second is the wicks: thin lines protruding from the top and bottom, showing the maximum and minimum values hit during that time. A green candle represents a price increase, while a red candle depicts a decrease.

This simple glyph summarizes the tug of war between buyers and sellers across that time period, allowing traders to analyze momentum and price action at a glance. Depending on chart settings, each candle can represent anything from one second to a year or more.

The first candlestick charts were invented by Japanese rice traders in the 18th century, and have since developed into a global standard for financial markets. In the cryptocurrency space, most exchanges make use of candlestick charts by default. Cryptocurrency markets are also often subject to greater volatility than most traditional assets, especially in markets with high amounts of leveraged trading; long wicks representing volatile price swings are therefore more common.

Analysts and traders typically use candlesticks in conjunction with a range of other indicators — such as trading volume, Fibonacci retracement levels and onchain data — to build a more complete picture of where an asset’s price could be headed.