Mr. Coin in the Crypto Circle: Illustrated Introduction to the Basics of Cryptocurrency K-Line (Part 1)

**

The K-line chart is a type of chart that originated in Japan during the Tokugawa shogunate era. It was initially used by rice merchants to record market trends and price fluctuations. Due to its detailed and unique marking method, it was later adopted by the stock and futures markets. The chart resembles a candle, with both black and white variations, and is also known as a candlestick chart. Through the K-line chart, one can comprehensively record daily or periodic market performance. After a period of price movement, specific patterns are formed, from which regular market information can be detected.

The K-line chart is drawn using the open price, high price, low price, and close price of each analysis period. Taking the daily K-line as an example, the area between the open and close prices is drawn as a rectangular body: if the close is higher than the open, it is called a bullish (positive) candlestick, usually shown with a red body (open at the bottom, close at the top); if the close is lower, it is called a bearish (negative) candlestick, often shown with a green body (open at the top, close at the bottom). In addition, thin lines connecting the high and low prices to the body are drawn as the upper and lower wicks (shadows). Note that in crypto, US/EU stocks, and forex markets, the color conventions are opposite to those in China: green commonly represents bullish candles, while red represents bearish candles.

According to different analysis periods, K-line charts can be divided into 1-minute, daily, monthly, etc. For example, one daily K-line represents a day, and one 1-minute K-line represents one minute. There are inclusion relationships between different periods: a daily K-line is formed from 24 sixty-minute K-lines, and a sixty-minute K-line is formed from sixty one-minute K-lines.

1. What is a Bullish (Positive) Candlestick?

Bullish Candlestick

Bullish candlesticks can be divided into various types based on different combinations of wicks and the body, each indicating different market implications: when a bullish candlestick has no lower wick and a long upper wick, it shows that the price encountered strong selling pressure during an uptrend; conversely, if there is no upper wick but a long lower wick, it means buyers are strong and the price found solid support during a decline. A long red bar with no wicks (also called a “sun line”) signifies a steady upward move dominated by buyers. If the upper wick is long and the lower wick is short, it shows intense battle between bulls and bears, but bulls have a slight advantage—note, if this pattern appears after a strong rally, it may signal an impending decline; if after a sharp drop, it may signal a rebound. If the upper wick is short and the lower wick is long, it represents strong upward momentum, with quick recovery from declines. Finally, if both wicks are long and the red body is short, this shows a balance of power between bulls and bears, making the market direction unclear.

2. What is a Bearish (Negative) Candlestick?

Bearish Candlestick Types of bearish candlesticks: No lower wick, long upper wick indicates a rise followed by a drop, weak rebound, and strong bearish pressure; no upper wick, long lower wick indicates strong downward pressure but with support below; short wicks with a long green body in a downtrend indicate continued strong selling, and after a big rally indicates a reversal attempt, with a possible sharp drop ahead; no wicks (big bearish line) shows a straight fall with strong selling; short lower wick, long upper wick indicates a bull-bear battle with bears stronger and weak rebound; short upper wick, long lower wick indicates a bull-bear battle with bears still strong but strong support on the way down; long upper and lower wicks, short green body shows balanced forces and unclear market direction.

What is a Doji?

Doji types: Long upper wick, no lower wick (inverted T-shape) shows buyers were strong but sellers pulled the price back, with bears stronger; long lower wick, no upper wick (T-shape) shows sellers were strong but buyers pulled the price back, with bulls stronger; both wicks long (big doji) shows bulls and bears evenly matched, further observation needed; long upper wick, short lower wick means price rose after open but fell back to flat at close, with bears stronger; long lower wick, short upper wick means price fell first then rose, with bulls stronger.

Bald and Bare Bearish Candlestick Characteristics: A bald and bare bearish candlestick represents a stepwise decline. It indicates bears were in complete control during the session, with buyers unable to resist, and the price often opens significantly lower the next day. Occurrence: When it appears in a downtrend, it suggests the price will accelerate downward.

3. Bullish Candlestick ** Subtypes of Bullish Candlesticks** No lower wick, long upper wick: indicates the price met strong resistance when rising, as shown in image 1); No upper wick, long lower wick: indicates strong buying, with support during declines, as shown in image 2); Short upper and lower wicks, long red body: indicates strong upward momentum and a firm price, as shown in image 3); No wicks, long red body, also called “sun line”: indicates continuous upward movement with strong buying, as shown in image 4); Long upper wick, short lower wick: indicates fierce bull-bear battle, with bulls stronger, often a reversal signal. Note: after a big rally, it often signals a coming decline; after a big drop, it may indicate a bottom rebound, as shown in image 5); Short upper wick, long lower wick: indicates strong upward force, with recovery after a drop, as shown in image 6); Long upper and lower wicks, short red body: indicates a bull-bear tug of war, balanced forces, unclear market direction, as shown in image 7).

4. Bearish Candlestick ** Subtypes of Bearish Candlesticks** No lower wick, long upper wick: indicates a rise followed by a drop, weak rebound, strong bearish force, as shown in image 1); No upper wick, long lower wick: indicates strong downward pressure but with support below, as shown in image 2); Short wicks, long green body, in a downtrend indicates continued strong selling; after a big rally, indicates a reversal attempt, with a possible sharp drop ahead, as shown in image 3); No wicks, also called “big bearish line”, indicates a straight fall with strong selling, as shown in image 4); Short lower wick, long upper wick: indicates a bull-bear battle, bears stronger, weak rebound, as shown in image 5); Short upper wick, long lower wick: indicates a bull-bear battle, bears still strong but strong support on the way down, as shown in image 6); Long upper and lower wicks, short green body: indicates balanced bull and bear forces, unclear market direction, as shown in image 7).

5. Doji Candlestick ** Subtypes of Doji Candlesticks** Long upper wick, no lower wick (inverted T-shape): indicates buyers were strong but sellers pulled the price back, bears stronger, as shown in image 1); Long lower wick, no upper wick (T-shape): indicates sellers were strong but buyers pulled the price back, bulls stronger, as shown in image 2); Long upper and lower wicks (big doji): bulls and bears evenly matched, further observation needed, as shown in image 3); Long upper wick, short lower wick: price rose after open but fell back to flat at close, bears stronger, as shown in image 4); Long lower wick, short upper wick: price fell first then rose, bulls stronger, as shown in image 5).