Japanese Bitcoin Candlesticks Patterns Crypto Technical Analysis
Japanese Cryptocurrency Candlestick PatternsBrief History
Candlesticks were developed in the 18th century by the legendary rice trader known as Homma Munehisa to give the overview of opening, high, low & closing market price over a given time period.
They were used by the legendary rice trader to predict future market prices. After dominating rice market, Munehisa then eventually moved to the Tokyo Exchanges where he then gained a huge trading fortune using this trading analysis. It's said that He made over 100 consecutive winning trades.
Types of Bitcoin charts
There are three types of charts used in Bitcoin: Line, bar and candles.
Line - plots a continuous line connecting closing bitcoin trading prices of bitcoin crypto.
Bars- displayed as sequence of OHCL bars. O H C L represents OPEN HIGH LOW & CLOSE. The Opening bitcoin trading price is displayed as a horizontal dash on the left and closing bitcoin trading price as a horizontal dash on the right.
The main disadvantage of a bars is that it is not visually appealing, therefore most traders don't use them.
Candlesticks - these use the same bitcoin trading price data as bar crypto charts (open, high, low, & close). However, they are displayed in a much more visually identifiable way which looks like a candle with wicks on both its ends.
How to Analyze
Rectangle section is called the body.
The high & low are described as shadows and plotted as poking lines.
The color is either blue or red
- (Blue or Green Color) - Bitcoin Prices moved up
- (Red Color) - Bitcoin Prices moved down
Most trading platforms like the MT4, use colors to mark the direction. Colors used are blue or green: when bitcoin trading price moves up, red: when bitcoin trading price moves down.
Candle Sticks Vs. Bar BTCUSD Trading Chart
When candles are used it is very easy to see if the price moved up or down as opposed to when a bar Charts are used.
The Japanese techniques also have very many formations that are used to trade the Bitcoin market. These patterns have different technical analysis explanation and the most common are:
The above patterns is what makes the Japanese candlesticks popular among technical traders and it's why this type of analysis are the most widely used when it comes to analyzing the btcusd trading market. The analysis for these pattern formations in bitcoin trading is the same as that one used in stocks trading.
Drawing These Charts on MetaTrader 4
To draw these on the MT4, choose the charts drawing tools within the "MT4 Toolbar" - shown below.
To view this toolbar on MetaTrader 4 navigate to 'View' Next to file at the tops left corner of MT4 Platform, Click 'View', Then Click 'Tool bars', Then check 'Charts' Button. Above tool bar will appear.
Once the above toolbar, pops up you can then select the type you want to convert to, If you want to view using the bar format, click the bar tool button as illustrated above, for line format click the line tool button, for Japanese candlesticks format click the "candlesticks tool button".
