Online Share Trading

What is Long wick candle?

Technical analysis has had a candlestick analysis since its inception. However, this analysis is primarily focused on the candle's body. The candlestick's wicks and shadows are a crucial aspect because they show extreme price levels (i.e. the high or low) for that trading session.

Wick trading considers the price ranges outside the day's close and open prices. Wick trading strategies are influenced greatly by the size of the wick. It is also important to remember that only one wick can be traded.

Candlestick trading

If the wick is very short, it indicates trading which was mostly held between close and open prices for that time period. The opposite is true. A wick that is too long indicates that price action has crossed the boundaries of open and close prices. There is a difference between an extended upper wick candlestick or a longer lower wick stick. If the high is very strong, but the close price is low, a long upper wick candlestick is possible. This indicates that even though buyers attempted to dominate the session for a large portion of it, the sellers managed to lower the price.

If the lower wick is longer it means that there was a strong trading session where sellers dominated but buyers were able to push prices higher.

How do you spot a long-wick candle ?

Long wicks should be at least one meter shorter than the candle's surrounding ones.

- Spot prices that are most likely to coincide with the long wick. This signals support or resistance levels.

To determine if there are trade opportunities, use the levels and long wicks together.

How do you trade a long-wick candle ?

The first step in identifying a trend is to identify it.

If you see a candle with a longer wick on the top in a downtrend, this means that the market is likely to fall.

If a long wick is seen at the top or bottom of a short trend, it can be traded for a reversal.

- It must be confirmed by resistance levels or support levels. Support is the level where there is a chance of a downtrend halting. Resistance is the opposite to support.

- A long wick candle is usually formed when a trend is ending, but shortly before there is an action reversal.

What is the secret to long-wick candlesticks?

Candlestick trading with long wicks occurs when the prices have to be tested and then rejected. Wicks are areas of rejection. It is possible to see a longer lower wick before prices move up. This is because bears control the market and bulls put pressure on it. Prices begin to rise and show a deeper lower shadow. The long, bearish candle that was once long and strong will now have a shorter wick. Similar to the bullish candlestick, a long, upper-wick candlestick starts with a bullish candle. Prices begin to fall as bears take control.

What happens if both wicks get longer?

The wicks at the top and bottom are usually not equal. Sometimes, one wick is shorter than the other. These candlesticks have a long, thick upper wick and a shorter lower wick. The body is also small. This candlestick is known as a spinning top when it is visible. This is an indication that bulls and bears are at a deadlock, even though they were both actively trading.

When there's no wick...

Sometimes a candlestick doesn't have a wick at all. It is called a marubozu candlestick. Black marubozu refers to when the open price equals the highest and the closing price equals the lowest. The flip is a white marubozu.

These situations show that wick trading does not involve short or long wicks, but also no wicks equal or longer than long wicks. Wick trading is important because it tells us everything about supply-demand shifts and sentiment in the market.

Summarizing the characteristics of the long-wick:

- A long upper line indicates that there isn't enough demand at the high level of price to drive a stock higher, at least in the short term.

- A longer lower wick means that the low price has been rejected. This indicates that a bearish trader profits on short positions while a bullish trader takes a long position.

Trading long wick candlesticks involves looking for long candles to determine if they have a lower or higher wick and if the price is moving in the opposite direction.

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