Japanese Bitcoin Candlesticks Pattern Setups Analysis
Japanese Candlestick PatternsBrief History
Candles were developed in the 18th century by legendary rice trader known as Homma Munehisa to give the overview of opening, high, low & closing market bitcoin price over a given time period.
They were utilized by the legend rice trader to predict future market bitcoin prices. After dominating rice market, Munehisa then eventually moved to the Tokyo Exchanges where he then gained a huge trading fortune using this 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 prices of bitcoin crypto.
Bars- displayed as sequence of OHCL bars. O H C L represents OPEN HIGH LOW & CLOSE. The Opening bitcoin price is displayed as a horizontal dash on the left and closing bitcoin price as a horizontal dash on the right.
The main disadvantage of a bars is that it's not visually appealing, therefore most traders do not use them.
Candlesticks - these use the same bitcoin price data as bar crypto charts (open, high, low, & close). However, they are represented in a much more visually identifiable way which looks like a candle that has 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 colour is either blue or red
- (Blue or Green Colour) - Bitcoin Prices moved up
- (Red Color) - Bitcoin Prices went down
Most trading platforms like the MT4, use colours to mark direction. Colors used are blue or green: when bitcoin price moves up, red: when bitcoin price moves down.
Candlesticks Vs. Bar BTCUSD Chart
When candles are used it is very easy to see if the bitcoin price headed up or down as opposed to when a bar Charts are used.
The Japanese techniques also have very many setups that are used to trade the Bitcoin market. These patterns have different technical analysis explanation & 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 most often utilized in analyzing the btcusd market. The analysis for these pattern setups in bitcoin trade is the same as that one used in stocks trading.
Drawing These Charts on MT4
To draw these on the MT4, select the charts drawing tools within the "MT4 Toolbar" - shown below.
To view this toolbar on MT4 navigate to 'View' Next to file at the left top corner of MT4 Platform, Click 'View', Then Click 'Tool bars', Then check 'Charts' Button. Above tool bar will appear.
Once the above tool bar, pops up you can then select the type you want to convert to, If you want to view using the bar chart format, click bar tool button as shown above, for line format click the line tool button, for Japanese candlesticks format click the "candlesticks tool button".
