Tools of Exchange Analysis
To win races on the TO THE MOON Game platform, it is not enough to just rely on luck — it is important to properly analyze the market situation. You can do this with the help of certain indicators. So what do all these pictograms mean, or how to read graphs correctly? Find in today’s article.
You probably know that there are buyers and sellers on the stock exchange, who create supply and demand in the market. In numerical terms, supply-to-demand ratio is reflected in the DoM indicator. You can read more about it here.
And now let’s talk about such a technique of reading the chart as Japanese candlesticks.
Japanese candlestick chart
In Japan, this indicator has been used for a very long time, but in Europe and the United States it was discovered only at the end of the XX century thanks to the work of Steve Neeson. Japanese candlesticks allow traders to get certain information about trading in a given period.
The candle consists of a body, upper and lower shadows (straight lines that come out of the body of the candle).
First, let’s talk about the body of the candle. On the Binance exchange, it is presented in two colors: green, which indicates the growth of the asset, and red, which indicates a decline in quotations. The lower margin of the body of the rising (green) candle and the upper margin of the falling (red) candle means the opening price, that is, the value of the asset set at the beginning of trading on the exchange. Accordingly, the upper edge of the rising / falling candle is the closing price (the value of the asset set at the close of trading on the exchange).
The shadows of the Japanese candle indicate the highest (upper shadow) and lowest (lower shadow) price during the specified trading period. Shadows can vary in their length: short shadows indicate a narrow range of trading near the opening and closing prices, and long shadows indicate a wide range, that is, active trading when quotes have significantly retreated from the opening price, and then returned to the closing price.
If the upper shadow is longer than the lower one, it means that the market was dominated by bulls (buyers), but then the bears (sellers) became more active, the supply increased, and the quotes fell to the closing price. If the lower shadow is longer than the upper shadow, the situation is the opposite: at first, the advantage was on the side of the sellers, but then the buyers raised the price to the closing price. Symmetrical shadows (shadows of the same length) indicate a period of uncertainty in the market.
Trading volume is the number of transactions concluded between sellers and buyers over a certain period of time. The growing volume indicates active trading, which leads to a change in the price of the asset, its rise or decline.
As a rule, if both the price and the volume increase, it means that the bulls (buyers) have a stronger position in the market, and on the contrary, if the volume increases while the price falls, the bears (sellers) dominate.
This indicator helps to determine the further direction of the market.
Using these tools together will not only protect you from unnecessary risks, but also helps to accurately predict further market movements. And this, in turn, significantly increases the chances of winning the race!