What Is a Candlestick Chart? Key Technical Analysis for Crypto Trading

9/9/2025, 6:27:26 AM

The K-line chart, also known as the candlestick chart, is a commonly used price change graphic in financial markets. It comprehensively presents market dynamics over a certain period through the opening, highest, lowest, and closing prices. Mastering K-line patterns in conjunction with trading volume can effectively enhance the judgment skills in asset trading, making it an essential basic skill for Web3 investors.

The basic structure of the K-line chart

The K-line chart divides market prices along the time axis, with each K-line presenting four key pieces of information: opening price, highest price, lowest price, and closing price. A red bullish line represents a price increase, while a green bearish line indicates a price decrease, with the body and shadow reflecting the range of price fluctuations.

Interpretation methods of K-line charts

For example, a red K-line with a long lower shadow indicates strong bullish replenishment, while a green K-line with a long upper shadow reveals increased bearish pressure. The ratio of shadows to the body can assist in analyzing tentative fluctuations or trend reversals, enhancing trading accuracy.

Typical K-line patterns and market signals

The hammer line indicates a possible bottom rebound, while the shooting star line suggests weakness in the upward trend; engulfing patterns and doji lines represent the struggle between bulls and bears and potential turning points. A series of consecutive same-color K lines reflects the strength of the trend, but all must be analyzed in conjunction with other indicators.

Enhance judgment with increased trading volume

Trading volume is the source of energy for trends. When volume increases and price rises, it indicates a healthy market; conversely, it may signal a reversal or major player selling off, especially important in the low liquidity encryption token market.

Techniques for Using Multiple Time Periods

By observing long-term trends through daily charts and combining them with short-term 4-hour and 15-minute candlestick patterns to find entry and exit points, it can effectively enhance trading success rates and create a multi-layered strategy layout.

Precautions and Risk Control

The K-line chart reflects market behavior rather than predicts it. When trading, one should assess trends, trading volume, and patterns comprehensively, and be sure to set stop-loss orders to effectively manage risk.

* The information is not intended to be and does not constitute financial advice or any other recommendation of any sort offered or endorsed by Gate.

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