Candlesticks Flashcards
Why are candlesticks important?
They describe price through bodies and wick. They tell a story. We can read and see what price did in that time frame using the one candle.
What are time frames?
Timeframes represent the time for a candlestick to close. For example a 5 minute chart has candles that represent 5 minutes of price action / price movement.
What do wicks of candle show?
They show where the price has went.
Most candlestick patterns are bullshit. Which ones are not and why?
The single candlestick patterns are the only ones to show you price action and dictate where price action is going to go.
Describe the different parts of a candlestick.
A bullish candlesticks open, close, Low and High and vice versa for a Bearish candlestick
A bullish candle opens at the bottom, and closes up.
the bearish candle opens at the high end and closes at the low end.
What are dojis and why are dojis good for reading price action?
Dojis are candlesticks that have long wicks and small bodies.
They show indecision in the market with their small bodies and long wicks. Their failure to close with full bodies show that people are indecisive in the market as a whole in that moment.
Why is it important to not take trades solely off candlestick patterns?
That is because candlestick patterns are only ONE confluence. We could see lots of bullish sings like strong rejection to the downside, closure to the upside etc but we may be breaking structure to the downside (a downtrend with bullish candlestick patterns)
What is a strong close?
A full body with a small wick compared to the body.
Why should we always wait for a candle close?
Because its easy to get caught up in the candle that is forming.
We can and should only make bias and decisions on candles that have formed, not ones that are forming. Remember, its not an actual candle until price action is done within whatever time frame your on.
What does “strong rejection to the downside” mean?
This means when there was a candlestick with a big bearish wick, but it didn’t close low - it got rejected to the downside (got rejected at those low levels)
