The smart trader does not enter a trade just because the price moved, but waits for a clear moment that shows evidence that the direction has become clear. Candle movements give strong signals, but we must know how to read them within context.
First signal: End of direction and start of reversal
When the price is moving in a clear direction, whether up or down, and a candle appears that looks different from the rest, like a small candle after a series of strong candles, this could be the beginning of a reversal. But we don’t enter immediately; we wait for another candle to confirm that the direction has actually changed.
Second signal: Breaking an important level and confirming it
If the price breaks a support or resistance area, we don’t enter immediately. We wait for a candle to close clearly after the break, and it should be strong, not hesitant. This candle confirms that the break is real, not just a quick movement and return.
Third signal: Reversal from a clear price area
When the price reaches a strong reversal area, like support or resistance, and a clear candle appears in the opposite direction, this could be an entry opportunity. But the candle must be strong, not weak or hesitant, and should be in a logical place within the overall market movement.
How do we know if the time is really right?
- The candle should be in an important place, not in the middle of volatility
- The direction should be clear beforehand, not random
- The candle itself should be clear, not hesitant or weak
Practical example
If the market is falling and has reached a support area, and a clear bullish candle appears, followed by a second candle confirming the direction, this moment could be suitable for entering a buy.
If the market is rising and has reached a resistance area, and a clear bearish candle appears, followed by a second candle confirming the drop, this moment could be suitable for entering a sell.
