How to identify the cross star in the candle chart and what does it mean?

The cross star is an important pattern in the K-line chart, indicating that the market may reverse or be hesitant, and combined with other indicators can improve trading accuracy.

Apr 03, 2025 at 02:57 pm

In cryptocurrency trading, the K-line chart is one of the important tools to analyze market trends and price movements. Among them, 'Cross Star' is a common K-line pattern, which is of great significance in analyzing market sentiment and predicting price trends. This article will introduce in detail how to identify the 'cross star' in the K-line chart and what this form indicates.

What is a K-line chart?

A K-line chart, also known as a candle chart, is a financial chart that displays the opening, highest, lowest and closing prices of prices in a specific time period. Each K-line consists of a rectangular body and two upper and lower shadows. The rectangular body represents the price range between the opening price and the closing price, while the upper and lower shadows represent the highest price and the lowest price.

Definition and identification of cross stars

The cross is a special K-line pattern, characterized by the opening price and closing price the same or very close, so the rectangular body of the K-line almost does not exist, forming a cross. The steps to identify a cross star are as follows:

• Observe the K-line pattern : On the K-line chart, look for those K-lines with almost the same opening and closing prices. The rectangular body of these K-lines is very small, and may even be just a horizontal line.

• Confirm the shadow : The cross star usually has upper and lower shadows, and the length of the shadows can be different. The shadow indicates the range of price fluctuations during this time period.

• Verify the opening price and closing price : Ensure that the gap between the opening price and closing price is very small, and the specific value can usually be seen on the trading platform.

Types of cross stars

Cross stars can be divided into several different types, each of which has slightly different meanings in the market:

• Long-legged cross star : The upper and lower shadows of this cross star are very long, indicating that the market has experienced large fluctuations during this period of time, but the price eventually returns to near the opening price.

• Tombstone cross star : This kind of cross star has no lower shadow, only upper shadow, which usually appears at the top of the market, indicating a possible price decline.

• Hammer cross : This kind of cross has no upper shadow, only lower shadow, which usually appears at the bottom of the market, indicating a possible price increase.

• Spindle cross : The upper and lower shadow lines of this cross are similar in length, indicating that the market is in a state of hesitation.

The market significance of cross stars

The appearance of cross stars in the market is usually regarded as an important signal, and the specific significance of the foreshadowing depends on the market environment and type of its appearance:

• Market Reversal Signal : The cross star is often seen as a signal that the market may reversal. For example, a tombstone cross star that appears in an upward trend may indicate an imminent price decline, while a hammer cross star that appears in a downward trend may indicate an imminent price increase.

• Market hesitation : The cross star may also indicate that market participants are hesitant about the current price level and cannot determine the future direction of the price. This usually occurs near important support or resistance levels.

• Confirmation requires other indicators : Although the cross star itself is an important signal, in order to improve the accuracy of the analysis, it is usually necessary to confirm it in combination with other technical indicators and market factors. For example, indicators such as trading volume, moving averages, and relative strength index (RSI) can help verify the signal of a cross star.

How to trade with cross stars

In cryptocurrency trading, identifying and utilizing cross stars requires caution and strategy. Here are some practical suggestions:

• Wait for confirmation : Do not trade immediately after seeing the cross. Wait for the subsequent K-line to confirm the cross star signal. For example, if a negative line appears after the tombstone cross, it may be a sell signal.

• Combined with other indicators : Use other technical indicators to verify the signal of the cross star. For example, if the RSI shows an overbought status and the tombstone cross star appears at this time, the possibility of selling is greater.

• Set stop loss and take profit : When trading, set reasonable stop loss and take profit points to control risks. For example, if you buy after the hammer cross, you can set the stop loss below the lowest point of the cross.

• Consider the market environment : The signal of a cross star may have different effects in different market environments. For example, in a strong upward trend, the cross may be a temporary adjustment, while in a long-term consolidation period, the cross may herald a breakthrough.

Application of cross star in different time frames

The application of cross stars in different time frames also varies:

• Short-term time frame : On a minute or hourly chart, a cross may indicate a short-term price reversal or adjustment. These signals are suitable for short-term traders.

• Medium-term time frame : On the daily chart, the cross star may herald the changes in the medium-term market trend. These signals are suitable for mid-term traders.

• Long-term time frame : On weekly or monthly charts, the cross star may herald long-term market trend changes. These signals are suitable for long-term investors to exploit.