Candlestick Reading:
This is a somewhat simpler approach many would love to watch it, specially those who missed price action.
Every candle formation reflects sentiment of traders, off course one side is buyer and other is seller, and candle reflects the agreement in between them.
1) Reading the candle on its close position
High close
- closing in upper third of candle range
-Reflects bullish sentiment
comparing (a) and (b) we see that (b) was able to drive prices higher from its open, showing very little resistance from the bears, whereas (a) initially fell from its open before being able to fight its way back higher. Candle (a) is potentially a little less bullish than candle (b). All of these candles from (a) to (f) are bullish; with a small difference in degree of bullishness.
Midclose Candle
-closing in the middle third of candle range
- Action here is neutral , as both sellers and buyers drive prices to extermes, but closes in middle third
-(i) for example is more on the bullish side of neutral compared with (l) which is on the bearish side of neutral.
Low close Candle
- closing in lower third of candle range
- Reflects bearish sentiment
- candle (m), for example, was only able to achieve a narrow range, while candle (o) demonstrated significant bearish pressure which drove price down a significant distance.
2) Closing comparison
We define a candle as a Bull Candle, Range Candle or Bear Candle, depending on where price closes with respect to the previous candles range.
A Bull Candle is one which closes above the high of the previous candles range. This is demonstrated via (a) to (c) in the examples shown below. Note that all three candles close above the high of the previous candle.
A Range Candle is one which closes within the range of the previous candle. This is demonstrated via (d) to (f) in the examples below. Note that all three candles close within the range of the previous candle.
A Bear Candle is one which closes below the low of the previous candles range. This is demonstrated via (g) to (i) in the examples below. Note that all three candles close below the low of the previous candle.
Candle (a) - High Close Bull Candle - Both the high close and the bull candle components represent bullishness. Combined, these two indicate strongly bullish sentiment.
candle (b) - Mid Close Bull Candle. Price once again closed above the prior candle, but this time with a neutral close at mid-candle. Although still bullish, sentiment is less bullish than example (a).
candle (c) - Low Close Bull Candle. it closed above the previous high, but higher prices were clearly rejected driving price to close near the low of the last candle. We have bullish sentiment (bull candle) combined with a bearish sentiment (low close). This is a weak bullish move.
candle (d) - High Close Range Candle.Individually this appears bullish, but comparing it with the previous candle we see fact that the high close candle is simply retracing approximately 50% of the previous strongly bearish low close candle. Combined, this is probably slightly on the bearish side of neutral.
candle (e) - Mid Close Range Candle.is clearly neutral with price testing higher and lower twice now before settling closer to mid-range of both candles. Neither side is showing dominance.
candle (f) - Low Close Range Candle; this combination is more on the bullish side of neutral, if appears at downtrend, and at tops it can have bearish effects
candle(g) - a High Close Bear Candle, which has clearly rejected lower prices and closed up at its highs. Still bearish, but showing some sign of bullish order flow opposing our bearish sentiment.
candle (h) - example (h) is somewhere in-between, demonstrating a Mid Close Bear Candle. Once again we have some bullish orderflow pushing price off the lows and opposing our bearish sentiment, but to a lesser degree than example (g).
candle (i) - Low Close Bear Candle, demonstrating extremely bearish sentiment, as both the Close Position and Close Comparison components imply bearishness.
Now you would be better be at chart reading, what is going on in prices, a fight among the buyers-sellers, and till one side surrender its aggressiveness or other way if one side looses its power, the other side takes on...
