For beginners in cryptocurrency trading, the main thing to look at for price fluctuations is to understand candlestick patterns and pay attention to their formations and positions, as well as to analyze them in conjunction with the current market conditions. The following is a detailed introduction:
1. Look at candlesticks
Distinguish direction through the colors of the candlesticks
Bearish: downtrend, solid line, represented in green in China and red internationally.
Bullish: uptrend, hollow line, represented in red in China and green internationally. If you connect the bearish and bullish lines, it will be easy to see the direction.
Look at the size of the body, which represents the difference between the closing price and the opening price. The larger the difference, the stronger the force of the uptrend or downtrend.
Based on the fluctuation range between the opening and closing prices, candlesticks can be categorized into extreme bearish, extreme bullish, small bearish, small bullish, medium bearish, medium bullish, and large bearish and bullish types. Extreme bearish and bullish candlesticks typically have a fluctuation range of about 0.5%; small bearish and small bullish candlesticks generally have a range of 0.6-1.5%; medium bearish and medium bullish candlesticks usually range from 1.6-3.5%; large bearish and large bullish candlesticks have a range of over 3.6%.
Look at the length of the shadow, which represents the difference between the highest and lowest prices of the day and the closing price. The longer the shadow, the greater the resistance. The longer the upper shadow, the greater the resistance to upward movement, and the longer the lower shadow, the greater the resistance to downward movement.
2. Patterns and positions
There are mainly two types of patterns in cryptocurrency investment: long-term patterns and short-term patterns. Generally, investors pay more attention to long-term patterns because short-term patterns move within relatively small ranges, yielding less significant data. They are also easily influenced by various factors, making it hard to grasp accurately, and ultimately getting lost among numerous influencing factors.
Therefore, investors must have a thorough understanding and recognition of long-term patterns to analyze the market effectively. The effective combination of positions in cryptocurrency investment is very important. There are many types of positions, and the information they convey varies. For example, the head and shoulders bottom pattern indicates a bottom reversal, and it usually appears in the bottom area. If a head and shoulders bottom appears, investors need to exit the market and patiently wait. Thus, we say that changes in position can help investors directly judge the upcoming trading content.
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