Wick
A wick is an essential component of candlestick charts that provide valuable insights into market sentiment. Wicks are significant in crypto trading because they can inform trading decisions and strategies
What is a Wick?
Wicks are the vertical lines on a candlestick chart that indicate the high and low prices of an asset over a specific time period. They stretch out above and below the main boxes that are commonly called candles.
Wicks are also called whiskers, shadows, or tails. They show the peak of high prices and lowest price on a particular candle in a specified period. This allows traders to better understand market sentiment before acting on it.
How to Read Wicks
When reading a candlestick chart, traders should focus on the length and position of the wicks. A long wick at the bottom of the candle indicates that the price went down and then came back up, suggesting an increase in buying pressure (this makes the price go up).
On the other hand, a long wick at the top of the candle indicates that the price went up and then came back down, suggesting an increase in selling pressure. This is commonly known as a market dump.
When reading wicks, traders must focus on the opening price, closing price and the candlestick wicks’ high and low marks. Also, if the candlestick box and wick is red (or black), it means the price of the cryptocurrency fell during the period and if the color is green (or white), the price increased during the period specified.
Learning to read wicks properly can make a trader counter-trade the wick by quickly going in the opposite direction of the wick. However, it is important to know that reading wicks alone on candlesticks should be used with other technical analysis tools and strategies for better results.
What are the Types of Wicks?
There are different types of wicks, including long, short, and wickless candles. Long wicks indicate a large price range, while short wicks indicate a small price range. Wickless candles, on the other hand, indicate that the closing and opening prices are consistent with the high and low marks of the candle.
Key Takeaway
Wicks are a valuable tool for crypto traders, providing insights into market sentiment and momentum. By understanding how to read wicks, traders can make more informed trading decisions and potentially increase their profits.
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