90.
Understanding Candle Analysis in Trading
Introduction to Candle Structure
- The speaker begins the discussion without summarizing previous content, indicating a focus on new material.
- Every candle in trading has essential components: an open, close, high, low, opening time, and closing time.
- This structure applies universally across different types of candles (standard or Aashi).
Analyzing Candles Beyond Isolation
- The speaker suggests that most traders view candles in isolation rather than understanding their full context.
- Each candle's characteristics can inform trading decisions; knowing the open and close times is crucial for analysis.
Bullish vs. Bearish Perspectives
- For bullish trades, the focus is on finding the low below the opening price; for bearish trades, it’s about identifying highs above the opening price.
- The importance of recognizing these points helps traders determine entry and exit strategies effectively.
Time Frame Considerations
- Transitioning from weekly to 4-hour charts allows for more detailed analysis while maintaining a broader perspective.
- The speaker emphasizes sticking to specific time frames (weekly, 4-hour, 1-hour, and 15-minute) for effective trading.
Key Concepts of Candle Movement
- Observing how candles form over time reveals patterns; lows can be taken out by subsequent lows without providing immediate entries.
- Understanding how a weekly candle appears through lower time frames aids in predicting market movements.
Identifying Bullish and Bearish Trends
- A bullish candle typically follows an "open-low-high-close" pattern; conversely, a bearish one follows "open-high-low-close."
- Traders should look to buy below the opening price when bullish and sell above it when bearish.
Accumulation Manipulation Distribution Model
- ICT introduces concepts of accumulation manipulation distribution as fundamental elements present in every candle's movement.
- Historical schematics from Wof illustrate market testing phases that indicate potential reversals or continuations.
Trading Strategies Based on Market Behavior
- When bearish, traders seek fake-outs with lower lows followed by higher highs before selling off; bullish strategies involve looking for higher highs after lower lows.
Understanding Market Dynamics Through Opening Prices
The Role of Opening and Closing Prices
- The concept of opening price is crucial in market analysis, with bullish trends identified when prices are above the opening price and bearish trends when below.
- Understanding the relationship between opening time, opening price, high, and low is essential for effective trading strategies.
Accumulation and Distribution Patterns
- Accumulation typically occurs at market lows; a pattern emerges where selling stops, leading to higher highs before a reversal.
- A flipped perspective reveals distribution patterns characterized by double tops followed by significant drops.
Time Frame Analysis
- Emphasizing the importance of various time frames (weekly, hourly, 15-minute), traders can align their strategies effectively across different intervals.
- While understanding these time frames is beneficial, it’s not mandatory for successful trading; focus on mastering key concepts first.
Homework Assignment for Practical Application
- Traders are encouraged to mark off all relevant opening times and closing times on weekly charts as part of their homework.
- Observing how candles behave around marked prices will provide insights into smart money movements and volume dynamics.
Preparing for Future Sessions
- After completing this week's homework, participants will be better prepared for lighter sessions that build upon these foundational concepts.