How To Read A Candlestick Chart Correctly
Candlestick is one of the most powerful tools and if you become a high-minded chart reader then you have the potential to become very murderous in the stock/crypto market.
I did get a lot of inspiration on an article that my friends wrote and wanted to do something similar so DID IT!
This guide provides value within your investing/analyze knowledge and all the pictures is from stockcharts.com
"Know what you own, and know why you own it." - Peter Lynch
1. Understand the basics
When you understand the basic of trading analyse your can apply it, in a more common way.I think stockchart explain this very well, so I am going to recommend you to visit their guide and check out a lot of their content.
1 and 2: This is the natural stage of a candlestick
3: A smaller candlestick means that the price hasn't developed in the right way and the price is at the same level it was when it started
4. When both White and the black candlestick are in the same direction, it is called "the shadow",
5. This is a typical downtrend, both candlesticks point down, and this is what I call a "down shadow", every time this happened my plan is to analyze the stock/coin extra cause when something goes down in price, it can mean that it is highly undervalued.
Read more about analyzing here
6. This is a very common problem in every aspect because this is what some people like to call "Upper-lower shadow", and what that means is that it is almost 50/50 if the asset will go up or down.
2. Look at historical data before you look at the price right now
If you want to buy an asset always look at the historical data, "when the coin/stock was made" and ask these simple question:
Why has this asset increased or decreased?
It isn't always an answer to this but keep in mind that if a cryptocurrency increases with 200% in a day, in most of the cases it can be a "Pump and dump" token.
When was the peak?
What is the highest price the asset has been sold for? If the price right now is over that; Don't buy it! Believe me, there is no "New bitcoin"
