2023-04-02 04:11:03
#EDUCATION LAB
Candlestick charts are a popular tool used in technical analysis to analyze price movements in financial markets. Each candle on the chart represents a specific time frame, such as one hour, one day, or one week. The candle consists of an opening price, a closing price, and the highest and lowest price reached during that time frame.
When traders refer to "candle closes," they are specifically referring to the closing price of a candlestick. This closing price is considered important because it represents the final price for that specific time frame, and it is used to determine whether a support or resistance level has been breached.
For example, let's say a trader has identified a key support level on a daily chart. They might watch for the price to break through this level, but they would wait for a daily candle to close above this level before considering it a confirmed breakout. The reason for this is that during the day, the price may have briefly moved above the support level, but if it closes below the level, it is not considered a confirmed breakout.
Therefore, waiting for the candle to close above the support level provides confirmation that the level has been breached and is more likely to hold as a new level of support. This is important because it helps traders make more informed decisions about when to enter or exit trades, and it reduces the risk of false breakouts or fakeouts.
In summary, waiting for a candle to close above or below a key support or resistance level provides confirmation that the level has been breached, and it can help traders make more informed trading decisions.
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