A few tips from me
Note: this is not 100% accurate
.
Candles with long wicks can indicate a reversal because they show that the market is experiencing rejection at certain price levels.
.
Why Can It Be a Reversal Signal?
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1. Long Upper Shadow
→ Bearish Reversal
- Price rose high but was ultimately rejected and fell back down.
- This means there are many sellers entering and pushing the price down.
- Usually occurs in resistance areas or after a long uptrend.
- Example: Shooting Star
.
2. Long Lower Shadow → Bullish Reversal
- Price dropped significantly but was finally pulled back up.
- This means there are many buyers entering and holding the price from dropping further.
- Usually occurs in support areas or after a long downtrend.
- Example: Hammer
.
But Be Careful!
- Candles with long wicks do not always mean the price will immediately reverse.
- Confirmation is needed from the next candle or other factors such as volume, other candlestick patterns, and technical indicators.
Note: this is not 100% accurate
.
Candles with long wicks can indicate a reversal because they show that the market is experiencing rejection at certain price levels.
.
Why Can It Be a Reversal Signal?
.
1. Long Upper Shadow
→ Bearish Reversal
- Price rose high but was ultimately rejected and fell back down.
- This means there are many sellers entering and pushing the price down.
- Usually occurs in resistance areas or after a long uptrend.
- Example: Shooting Star
.
2. Long Lower Shadow → Bullish Reversal
- Price dropped significantly but was finally pulled back up.
- This means there are many buyers entering and holding the price from dropping further.
- Usually occurs in support areas or after a long downtrend.
- Example: Hammer
.
But Be Careful!
- Candles with long wicks do not always mean the price will immediately reverse.
- Confirmation is needed from the next candle or other factors such as volume, other candlestick patterns, and technical indicators.