Whiskers

Whiskers are the vertical lines extending from candlestick charts that indicate the highest and the lowest points of a trading pair.

What Does Whiskers Mean in Crypto?

Whiskers, also known as shadows or wicks, are the vertical lines that extend above and below a bar on a graph or candlestick charts of financial products, including cryptocurrency assets. These lines typically represent the highest and lowest price ranges the asset reached within a specific timeframe.

Wicks simply show the price extremes of a cryptocurrency asset. This allows you to understand and interpret market volatility and sentiment, enabling you to take advantage of potential price reversals.

How Do Wicks Work?

Assume that you’re monitoring Bitcoin’s candlestick chart with a 10-minute bar per candle. If the price opens at $70,000, declines to $69,800, appreciates to $71,000, and the timeframe closes at $70,200, the candlestick will be indicated with a green candle. The wick will be from $69,800 (the lowest price point during this timeframe) to $70,000 (the opening price). Then there’ll be a solid green body candle from the opening price to the closing price, which is $70,200. Finally, there’ll be another wick from the closing price to the highest price point reached during this period, which is $71,000.

To explain, each segment of the candlestick has a solid box (candlestick body) – which comprises the opening and closing prices – and two shadows extending above and below the body. To put it another way, the solid box or candlestick body symbolizes the opening and closing prices while the wicks extend to the upper and lower limits that the asset’s price reaches within the specified period.

A red or black body and wick typically indicate that the asset’s price dropped during the specified timeframe. In contrast, a green box and whisker represent a price increase. In situations where the closing and opening prices match the high and low markings of that candlestick, the candle is said to be “wickless.” 

In summary, traders can use wicks to gauge an asset’s volatility within a certain period. For instance, short wicks indicate that the upper/lower limits are close to the opening/closing prices, suggesting relatively steady price movements. On the other hand, long wicks suggest high volatility since the highest/lowest price moves significantly away from the opening/closing price.