Online Share Trading

Analysis on Candlestick Wick

Candlesticks are an essential part of technical analysis and can help you understand price movements. Candlesticks provide traders with a visual indication of whether a trend is continuing or reversing.

Each candle has two wicks and a body. A candlestick has four price factors: the opening and closing prices, the highest time frame, the day, and the lowest. Also known as shadows, the wicks are also known as wicks. The shape of the candle will change depending on how much the price moves. The highs and lows can be seen in the wicks.

Many candlestick patterns are useful for technical analysis, and many are very popular. Candlestick wicks can also be used for trading and analysis. Candlestick analysis requires traders to use only one wick for analysis. However, traders may use both wicks for trading. To analyze candlestick wicks for the top candle, you'd need to determine the highest candle, and then keep track of the price at this level. You would then need to watch the open and close and choose the highest. Next, subtract the high candle from the close or open.

If you wanted to trade the bottom wick, you would first look at the lowest candle and then track the closing and open prices. Then, pick the lower level. You would then subtract the low from the open or close, depending on which is lower.

These formulae can be used to calculate the wick size. If a bullish candle has a high price of 1.0800, close at 1.0795 and an open price of 1.5750, the top wick would be 1.0800-1.0795 which is five pips. The bottom would be 3 pip (1.0795 - 1.0747).

What does wick size tell traders?

A shorter wick means that the majority of trading occurred between open and close price periods.

A long wick means that price activity has moved beyond close or open. If the high is extremely strong and the close is weak, a long upper wick is observed. This is because sellers were able to lower the price again despite buyers showing strength.

- The lower wick that is longer is an indication of the flip. This means that sellers were able to hold the session under control but could not keep up with the buyers pushing the price higher. The session concluded on a positive note.

One wick is usually considered to be crucial for analysis, as we have already mentioned. The support and resistance levels will determine which wick is important. The bottom wick is important when a price is close to an important support level. It is indicative of whether there is a breakout (nearish below) at the support or a reversal near the support. The price that is expected to see a pause or reversal in the downtrend is called support. Resistance is when the support level flips.

Wick percentage

Next, candle wick analysis or trading is to determine the wick percentage. This is done by multiplying the wick size and the candle size.

A 5 pips candle and a 20 pips candle have a 5/20 or 25% ratio. These percentages can help traders determine which breakout is strong and weak.

It should be between 0 and 5 percent. This indicates that the candle is closing strongly, or that the bulls or bears are in control.

If the percentage reaches 30 to 35%, it indicates indecisiveness. This is a sign that neither the bulls or the bears have control.

The range of 50 to 67% indicates a weak candle close, but the higher numbers of 67 percent indicate an extremely weak candle close, or a reversal close, which is when the candle is most likely to be reversal.

Candlestick Wick Analysis

It is tempting to concentrate primarily on the candle's bodies and not to track wicks. Wick trading offers a better picture of the risk and reward situations and has greater potential. Candle wick trading is a way to determine if an asset's true or real value has changed. The candle body provides signals about an asset's actual price.

Although wicks can indicate likely reversals they can also confirm or validate resistance levels that were previously supported.

In summary

Candlestick wicks can be used to indicate breakouts or reversals in technical analysis. Candle wick trading involves understanding the size and ratio of the candles to determine what they reveal and which breakouts are strong or weak. To get a better understanding of the action, traders should use candlestick wick analysis in conjunction with other charts.

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