What are Whiskers (Wicks)?
Let's find out Whiskers (Wicks) meaning, definition in crypto, what are Whiskers (Wicks), and all other detailed facts.
A whisker (also known as a wick) refers to the vertical lines that run above and below the core boxes or bars. Typically, it appears on a graph of a financial product, asset, or security. The graphs are usually referred to as candlestick charts.
Every candlestick chart segment usually has a solid box. It's also referred to as a candlestick body. A solid box is created by the starting and closing prices. Two whiskers go above and below the solid box. If the box and whiskers are red (or black), the price of the underlying asset declined during that time period. However, if the box and whiskers are green – the price grew.
The candle represents the asset's opening and closing prices. The whiskers, on the other hand, represent the upper and lower limits of the underlying asset's price during a certain time period.
The whiskers themselves display price extremes. This allows traders to have a better understanding of market sentiment and momentum. Essentially, whiskers are generated as a visual record of price movement in relation to the opening and closing prices.
The whisker's length is important:
- Short wicks indicate that the highest (or the lowest) price is close to the opening (or the closing) price.
- A lengthy wick suggests that the market experienced higher levels of volatility. Some technical analysts believe that a lengthy wick generally signals a price reversal. In this case, the market moves in the opposite direction of the wick.
In addition, candles can also be wickless. The closing and opening prices of these candles match the high and low markings of that particular candlestick. The shape of such candles is square or rectangular.
Candlestick patterns are definitely something that should be considered when trying to understand and forecast market sentiment and price movements. However, it's crucial to remember that candlestick analysis should be used in conjunction with other tools and technical analysis indicators.