The rectangle, called the body, represents the difference between the opening and closing price for the same day. The body can be white or black, although they are often replaced by the colors green and red respectively.

A white or green body means that the closing price was higher than the opening price. Conversely, a black or red body means that the closing price was lower than the corresponding opening price.

The opening and closing prices have great importance in Japanese candlesticks. The small stripes or lines at the top and bottom of the body are known as wicks, hairs or shadows, and represent the highest and lowest prices of the day.

A candlestick pattern may consist of a single line or a combination of multiple lines, usually never more than five. Although almost all candlestick patterns are used to identify market turning or reversal points, there are some that are used to determine trend continuity. The former are called reversal patterns and the latter are called continuation patterns.

Upward patterns usually follow a downtrend in the market, and indicate a reversal in the direction in which prices are moving. They can be an indicator for investors to consider investing their funds in acquiring assets that would benefit from any upward trajectory.

Descending candlestick patterns usually form after an uptrend, and is a signal of a point of resistance. Often, great pessimism about the market price causes investors to shed their assets to take advantage of falling prices.

There are dozens of candlestick patterns, identified by colorful names that reflect Japanese culture. In 2008, American computer scientist and renowned trader, Thomas Bulkowski, edited "Encyclopedia of Candlestick Charts", a book where he examines 103 candlestick formations in depth, from guidelines for their identification and statistical analysis of their behavior, to detailed trading tactics.

Among the most common candlestick patterns, the following are included:

Three Line Strike

One of the most powerful reversal patterns is the Three Line Strike candlestick pattern, composed of 5 bars: three bars in the direction of a trend, followed by a final candlestick retracing back to the starting point. Investors use this pattern as an opportunity to buy at a current trend low or sell at a current high.

Source

The bullish formation is composed of a large green candlestick, 3 bullish candlesticks and a bearish candlestick that erases the advance made by the previous 3 candlesticks.

On the other hand, the bearish formation is composed of a large red candlestick, 3 descending candlesticks and an ascending candlestick that erases the decline made by the previous 3 candlesticks. According to Bulkowski, this reversal predicts higher prices with an accuracy rate of 83%.

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Two Black Gapping

The bearish Two Black Gapping continuation pattern appears after a notable high in an uptrend, with a downward gap producing two black(red) bars that record lower lows. This pattern predicts that the decline will continue to even lower lows, which could trigger a larger scale downtrend. According to Bulkowski, this pattern predicts lower prices with an accuracy rate of 68%.

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Three Black Crows

This pattern begins at or near the high of an uptrend, with three large black or red candlesticks with short or virtually non-existent wicks. Each session opens with a price similar to the previous day's price, but selling pressure causes the price to fall further and further at each close, potentially triggering a larger-scale downtrend.

Investors interpret these patterns as the beginning of a downtrend, as the number of sellers outnumber the number of buyers for three days in a row. According to Bulkowski, this pattern predicts lower prices with an accuracy rate of 78%.

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Homework Task.

1.) Choose at least 1 of the following cryptocurrencies.

• Axie Infinity AXS
• Chilliz CHZ
• Cardano ADA
• VeChain VET

Make an investment of $ 12 or more. Show screenshots of the process. Why did you choose this cryptocurrency? What is it Market Capitalization? What is it position in the cryptoasset rankings? What is the objective of the project behind this coin? Who founded this coin? Show the roadmap. What is the specific purpose of the cryptocurrency?

You can make your investment in another cryptocurrency, but you have to answer the same questions. (Currencies that are not allowed: TRON, Steem, SBD, Bitcoin, Ethereum or any stablecoin)

2.) Explain in your own words what the "Evening Star" pattern consists of. What is its hit rate?

3.) Explain in your own words what the pattern "Abandoned Baby" consists of. What is the percentage correct?

4.) Perform analysis for 3 and 7 recent calendar days for Bitcoin Do you identify any patterns? Show screenshots

The graphs you use must have your Steemit username.

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Guidelines

(1) Your article should be at least 300 words.

(2) This homework task expires Saturday, July 31 at 23:59 UTC (7:59 pm Venezuelan Standard Time)

(3) Eligibility Criteria--

• Must have a reputation of 55 or above
• Must have at least 250 SP (excluding any SP delegated-in)

(4) Add tag #imagen-s3week5 and #cryptoacademy in your post and should be among the first five tags. And also make sure you post in the Steemit Crypto Academy community.

• PLAGIARISM AND SPAM WILL NOT BE TOLERATED

• Use copyright-free images or indicate the original source

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Cc:-

@steemitblog
@steemcurator01
@steemcurator02