Candle Range Theory Explained and Simplified | Easily Predict the Next Candle

Summary

In this episode of Smart Risk, the focus is on Candle Range Theory (CRT), an advanced trading concept that promises to enhance win rates by predicting price movements and formations. The video delves into the psychology behind CRT, explaining how every candlestick on a chart represents a price range. It outlines the market's three main phases: accumulation, manipulation, and distribution, known as the 'power of three.' The tutorial walks viewers through identifying CRT patterns using candlestick formations and offers practical tips for executing trades based on CRT, emphasizing the importance of timing and aligning time frames for high-probability trades.

Takeaways

• 🔍 Candle Range Theory (CRT) is an advanced trading concept that can significantly improve win rates by predicting price movements and candle formations.
• 📈 CRT is based on the idea that each candle on a chart represents a price range, which can be analyzed on lower time frames for more detailed insights.
• 🌐 The market moves through three phases: accumulation, manipulation, and distribution, known as the 'power of three', which is a continuous cycle.
• 🕒 The Asian, London, and New York trading sessions play crucial roles in identifying the accumulation, manipulation, and distribution phases, respectively.
• 📊 The 15-minute chart is recommended for recognizing CRT patterns as it provides clear price action aligned with higher time frames.
• 📌 CRT patterns can be identified using Candlestick patterns, which can be a sequence of three or more candles, with the key being the range they form.
• 🐉 In a bullish scenario, the CRT pattern involves a range candle setting up a range, a second candle sweeping through liquidity, and a third candle breaking out of the range.
• 📉 Bearish markets also follow CRT principles, applying the same concepts to downward price movements and formations.
• ⏰ Timing is essential for high-probability CRTs, with specific times in the Forex market being optimal for identifying and executing trades based on CRT patterns.
• 📈 CRT provides a systematic approach to trading by simplifying the process with fixed objectives, rules, and minimal conditions to look for before executing a trade.

Q & A

What is Candle Range Theory (CRT)?

Candle Range Theory is an advanced trading concept that involves analyzing candlestick patterns to predict price movements and formations. It suggests that every candle on a chart represents a range of price action, which can be further analyzed on lower time frames.

How does CRT relate to the psychology of trading?

CRT is based on the idea that market movements can be understood through three main phases: accumulation, manipulation, and distribution. These phases reflect the market's heartbeat and are psychological stages that traders can use to anticipate price movements.

What are the three main phases of market movement according to CRT?

The three main phases are accumulation, manipulation, and distribution. Accumulation is a period of consolidation where price moves sideways. Manipulation involves taking out liquidity, and distribution occurs within the range created by manipulation.

Why is the Asian session important in CRT?

The Asian session is crucial in CRT because it often sets the stage for the day's trading by accumulating price action. The behavior of the Asian session can dictate whether the subsequent London and New York sessions will manipulate or accumulate further.

What is the 'power of three' in CRT?

The 'power of three' refers to the three-candle sequence that captures the accumulation, manipulation, and distribution phases within a single pattern. This sequence is considered a high-probability setup for successful trades.

How can traders identify CRT patterns using candlestick patterns?

Traders can identify CRT patterns by looking for specific sequences of candles on higher time frames, such as a range candle followed by a liquidity-taking candle and then a breakout candle. The key is to recognize the formation and the subsequent price action that confirms the pattern.

What is the recommended time frame for recognizing CRT patterns?

The 15-minute chart is recommended for recognizing CRT patterns as it provides clear price action that aligns with higher time frames and allows traders to identify key levels and potential breakouts.

What criteria and rules should be considered when identifying high-probability CRTs?

When identifying high-probability CRTs, traders should look for patterns around key levels, consider the timing of the pattern in relation to the market sessions, and match the entry time frame with the CRT's time frame. They should also consider the sequence of candles and the price action that confirms the pattern.

How can traders use the CRT model to execute trades?

Traders can use the CRT model to execute trades by identifying key times and patterns, zooming into appropriate time frames to monitor price action, and placing orders at strategic points such as order blocks or previous high/low points. They can set take profit levels based on the range of the CRT pattern.

What are the key times to consider for high-probability CRTs in the Forex market?

The key times for high-probability CRTs in the Forex market are 1:00 a.m., 5:00 a.m., 9:00 a.m., 1 p.m., 3:00 p.m., 6:00 p.m., and 9:00 p.m. These times correspond to market sessions and shifts in liquidity that can influence CRT patterns.

Outlines

00:00

📈 Introduction to Candle Range Theory

This paragraph introduces the video, which focuses on Candle Range Theory (CRT), an advanced concept in trading. The host explains that mastering CRT can help traders align with institutional money and predict price movements before they happen. The video promises a detailed walkthrough of CRT and encourages viewers to like, subscribe, and stay attentive throughout the session.

05:02

🔍 Understanding Candle Range Theory and Market Phases

Candle Range Theory is explained as the idea that every candle on a higher time frame represents a range, which can be broken down when zooming into a lower time frame. The market moves through phases of accumulation, manipulation, and distribution, a repeating cycle known as the 'Power of Three.' The paragraph highlights the importance of observing the Asian session for clues on the price movement for the London and New York sessions and recommends using a 15-minute chart for recognizing CRT patterns.

10:02

📊 Identifying CRT Patterns Using Candlestick Sequences

This section explains how to identify CRT patterns through a sequence of candles on higher time frames. In a bullish scenario, the sequence involves three candles: one to set the range, one to sweep liquidity, and one to break out of the range. The process can involve more than three candles, but the key is to recognize the manipulation and distribution phases. This applies to both bullish and bearish markets, and multiple examples are provided to show how ranges and liquidity sweeps form on the charts.

🚀 High-Probability CRT Models and Their Criteria

The paragraph focuses on high-probability CRT models, particularly those that effectively capture the accumulation, manipulation, and distribution phases within three candles. The process is described through a sell-side liquidity pool, accumulation of price, manipulation by taking out the range high, and distribution towards the sell-side liquidity. The section also lists key times to identify CRT patterns and explains how to match higher and lower time frames for executing trades.

💡 Applying CRT to Real Market Scenarios

This section walks through real-time application of CRT on NASDAQ and the Euro-Dollar charts. By identifying key candles at crucial times, such as the 2 PM candle, the process involves zooming into lower time frames to find entry points after confirming a CRT pattern. The price action, liquidity sweeps, and eventual take-profit targets are outlined, demonstrating how traders can apply CRT in different time frames for optimal trade execution.

🏆 Conclusion and Trade Success Example

The final part summarizes a successful trade example using the CRT model. The host walks through how the trade played out on the Euro-Dollar pair, confirming a CRT model, finding entry points, and achieving take-profit targets. The video concludes with a call to action for viewers to subscribe and leave feedback, with promises of future content focused on trading strategies.

Keywords

💡Candle Range Theory (CRT)

Candle Range Theory (CRT) is an advanced trading concept discussed in the video, which is claimed to be a secret from the ICT trading community. It is presented as a model that can potentially increase a trader's win rates by predicting price movements and candle formations before they occur. The video suggests that mastering CRT will allow traders to align with institutional money, rather than being on the opposite side of their trades. CRT is used throughout the script to demonstrate how to analyze and predict market movements based on candlestick patterns.

💡Accumulation

Accumulation is one of the three main phases of market movement described in the video, alongside manipulation and distribution. It refers to a period of consolidation where the price moves sideways, typically occurring at the beginning of a cycle. The video uses the concept of accumulation to explain the first phase of the 'power of three' pattern, which is a recurring market behavior. For example, the script mentions that if the Asian session has accumulated, it sets the stage for the London session to manipulate and the New York session to distribute.

💡Manipulation

Manipulation is the second phase in the market movement cycle described by the video, following accumulation and preceding distribution. It involves taking out liquidity and is characterized by price action that moves the market away from a consolidation phase. The video script uses manipulation to illustrate how the market can change direction, often leading to a breakout from a range, which is a key element in identifying CRT patterns.

💡Distribution

Distribution is the final phase in the market movement cycle outlined in the video, following accumulation and manipulation. It is where the market is said to distribute within the range created by the manipulation phase. The concept of distribution is used to explain the final stage of the 'power of three' pattern, where the price is expected to continue in a particular direction, often leading to a profitable trading opportunity.

💡Asian, London, and New York Sessions

These terms refer to the different trading sessions that occur in the global forex market, each associated with a specific geographical region. The video script uses these sessions to explain the typical flow of market activity throughout the day. For instance, the script suggests that if the Asian session accumulates, the London session is expected to manipulate, and the New York session to distribute, which is a key aspect of identifying the 'power of three' phases in CRT.

💡15-Minute Chart

The 15-minute chart is highlighted in the video as the best time frame for recognizing CRT patterns. It provides clear price action that aligns with higher time frames, making it a preferred tool for traders to identify and act on CRT signals. The video script uses the 15-minute chart as an example of how to apply CRT in practice, suggesting that it offers a balance between detail and a broader market view.

💡Candlestick Patterns

Candlestick patterns are visual representations of price movements used in technical analysis. The video script discusses how these patterns can be used to identify CRT patterns, such as a sequence of candles that indicate a range, a breakout, or a sweep. The video provides examples of bullish and bearish scenarios, explaining how certain candlestick formations can signal high probability trading opportunities within the CRT framework.

💡Key Levels

Key levels are significant price points that act as support or resistance in the market. The video script emphasizes the importance of identifying CRT patterns around these key levels, as they are more likely to lead to successful trades. The concept of key levels is integral to the CRT model, as it helps traders pinpoint areas where the market is more likely to react, providing potential entry and exit points for trades.

💡Timing

Timing is crucial in the CRT model, as it dictates when to identify and act on CRT patterns for high probability trades. The video script lists specific times in the forex market that are considered optimal for identifying CRTs, such as 1:00 a.m., 5:00 a.m., and other key times. Proper timing is essential for aligning with the market's natural rhythm and increasing the chances of a successful trade.

💡Entry and Exit Points

Entry and exit points are the specific price levels at which a trader decides to enter or exit a trade. The video script provides guidance on how to use CRT to identify these points, such as waiting for a candle to sweep below a range and then push back inside to confirm a pattern before entering a trade. Understanding entry and exit points is fundamental to executing trades based on the CRT model effectively.

💡Stop Loss and Take Profit

Stop loss and take profit are risk management tools used in trading to limit potential losses and lock in profits. The video script discusses setting stop losses below key support levels and take profits at the midpoint or high of a range, depending on the risk-reward ratio sought. These tools are essential for managing risk and protecting profits in the context of the CRT model.

Highlights

Introduction to Candle Range Theory, an advanced trading concept that can significantly improve win rates by predicting price movements and formations.

Candle Range Theory is based on the idea that each candle on a chart represents a range of price action, which can be analyzed on different time frames.

Market movement is described through three main phases: accumulation, manipulation, and distribution, forming a continuous cycle.

The 'power of three' concept explains how price cycles through accumulation, manipulation, and distribution within a three-candle sequence.

The Asian, London, and New York trading sessions are key to identifying the accumulation, manipulation, and distribution phases.

The 15-minute chart is recommended for recognizing CRT patterns due to its clear price action alignment with higher time frames.

Bullish and bearish scenarios can be identified using Candlestick patterns to predict market movements.

CRT patterns can form with more than three candles, but the key is the sequence's relation to the range and liquidity.

Examples of high-probability CRT models are provided, showing how they capture the essential market phases within a three-candle sequence.

Criteria and rules for identifying high-probability CRTs include looking for patterns around key levels and timing entries at specific times.

The importance of matching entry time frames with CRT's time frame is emphasized for effective trading.

A step-by-step guide on how to use the CRT model to execute trades, including identifying key times and levels.

Practical examples demonstrate how to apply the CRT model to the NASDAQ and Euro Dollar charts for trading decisions.

Strategies for setting entry points and take profit levels based on CRT patterns for optimal risk-reward ratios.

The video concludes with a call to action for viewers to subscribe and engage with the content for further educational value.

Transcripts

hey Traders and welcome to another

episode of smart risk today we will talk

about the candle range Theory an

advanced concept that's been kept secret

from the ICT trading Community but has

the potential to Skyrocket your win

rates by mastering this concept you will

be able to predict upcoming price

movements and candle formations before

they even happen in the market this

powerful trading model will give you

insights into being on the same side as

institutional money instead of being on

the opposite side of their trades so

make sure not to miss any part of this

video and watch

carefully we're going Beyond just Theory

today we'll walk you through the candle

range Theory step by step breaking down

the key points and Concepts you need to

fully Master this Advanced trading model

we always appreciate your support so

please give this video a thumbs up and

subscribe to our Channel if you are new

see you after intro

[Music]

[Music]

welcome back Traders so let's get

started before we jump into the basics

of Candlestick CRTs let's take a moment

to understand the psychology behind

candle range Theory so what exactly is

candle range Theory the idea is simple

every candle you see on a chart

represents a range in other words a

candle you see on a higher time frame is

just a range of price action when you

zoom in to a lower time frame since

ranges can be swept WT broken out or

retested in the market all of these

actions can also show up in Candlestick

patterns every candle has a high and a

low right so if you zoom in you'll see

that a range forms between the candle's

highest and lowest points on a lower

time frame you've probably noticed that

the market moves through three main

phases accumulation manipulation and

distribution price is always cycling

through these phases imagine it like a

never-ending Loop for first the price

accumulates then it gets manipulated and

finally it's distributed before the

whole process starts over again this

pattern is what we call the power of

three and it's basically the heartbeat

of the

market basically the price goes through

an accumulation phase which is

essentially a period of consolidation

where the price moves

sideways then it manipulates by taking

out liquidity and finally it distributes

within the range that the manipulation

created this is where you should start

looking for the typical AMD the Asian

session the London session and the New

York session if the Asian session has

accumulated you typically expect the

London session to manipulate and then

the New York session to

distribute but here's a pro tip to keep

in mind if the price has expanded

instead of accumulating during the Asian

session don't expect the London session

to

manipulate instead you should expect it

to accumulate which means you then look

for the New York session to manipulate

so it all comes down to what the Asian

session did just check out the Asian

session first and that will give you the

most accurate way to identify AMD and

the power of the three

phases regarding time frames the

15-minute chart is your best bet for

recognizing AMD it gives you clear price

action that also aligns with higher time

frames so with that in mind let's dive

into how you can identify a CRT pattern

using Candlestick patterns afterward

we'll look at different scenarios that

might come up when you're trying to

identify CRTs on your

chart in the bullish scenario the

Candlestick based CRT typically refers

to a three candle sequence on a higher

time frame like 1 hour or upper here's

how it works the first candle sets up a

range with its high and low the second

candle takes out the liquidity of the

first candle by a wick the third candle

breaks out of this range

keep in mind though that the CRT model

doesn't always have to be a three candle

sequence it can also form with a series

of more than three candles the key

difference is that a three candle

sequence typically happens over a

shorter period but the principle Remains

the Same whether it's three candles or

more for example in this candle series

you can see that multiple candles were

formed to reach the highest point of the

range candle the sequence goes like this

first a range candle was formed followed

by an inside bar then we had a sweeping

candle that swept below the range with

its shadow and finally the price formed

several more candles until it hit the

high of the range

candle these Concepts also apply to

bearish markets you can apply these

principles across different time frames

and on any price action based

chart to solidify what we have learned

so far let's see more examples of

Candlestick based CRT models that we

might encounter in the market

starting from the top this first

scenario is the most critical CRT model

offering a high probability of

success why because it perfectly

captures the accumulation manipulation

and distribution phases all within a

three candle sequence what we call the

power of three in just three

candles let's say we have a perfect

cell-side liquidity pool right beneath

this bullish

candle what happens next is that the

price pushes upward entering the

accumulation phase the price then

manipulates by taking out the high of

the range and finally it enters the

distribution phase signaling that the

price will likely continue downwards

toward the sells side

liquidity this gives us a clear

continuation to the

downside here we've already seen the

accumulation manipulation and

distribution the complete power of

three next we see a range candle

followed by a bullish green candle that

sweeps below the range then the price

forms multiple candles until it closes

above the

range once again a range is formed

liquidity gets taken out and then the

price pushes higher eventually reaching

the range as

high it's the same scenario here a range

candle forms but it takes a bit longer

for the price to sweep the range candle

low then almost immediately the price

reverses Direction heads towards the

range as high and closes above

it the rest follow the same pattern as

the examples we've just

discussed now let's see what criteria

and rules we need to consider in order

to identify high probability

CRTs CRT is basically an objective and

mechanical way to simplify your trading

by suggesting simple steps fixed

objectives and rules and also by

minimizing the terms and condition that

you need to look for to execute a high

probability

trade first you need to look for CRTs

around key levels so the higher time

frame candle should be identified around

the key

areas second timing is crucial make sure

you're identifying CRTs at Key times for

high probability CRTs here are the key

times to consider in the Forex Market

1:00 a.m. 5:00 a.m. 9:00 a.m. 1 p.m. 300

p.m. 6 and 900

p.m. for matching your entry time frame

with the crt's time frame you should

consider that if your identified CRT

range is on the monthly time frame then

for entry you should use the daily time

frame if your CRT comes from the daily

chart you should execute your trade in

the 1hour time frame if your identified

CRT is on the 4-Hour time frame then

entries must come from the 15-minute

time frame if your CRT is on the 1 hour

time frame then you can use a 5 minute

or 1 minute time frame for your entry if

you use the 15-minute time frame to

identify CRTs then you should use one

minute to place a sell or buy

position now let's see how to use the

CRT model to our advantage and execute

trades based on

it here we have the NASDAQ 1hour time

frame on the

screen as you can see the price has

created a large bearish candle at 2:

p.m. a key time so I'm going to

highlight its high and low as the

potential CRT range candle high and

low next I'll zoom into the 15-minute

time frame and wait for the 300 p.m

candle to form

now as you can see the 3pm candle has

formed and I'll highlight its high and

low as the latest candle range high and

low if you look closely you can see that

the three PM candle sweeps below the

range of the hourly 2PM candle with its

Wick and then immediately pushes back

inside the 2PM candles

range following this we see the price

push upwards and eventually close above

the 3pm candle

high if we zoom out to the 1hour time

frame we can see that the price has

swept the 2PM candles low with this 3pm

dogee candle confirming a CRT model

formed at a key time there's a high

probability that after completing the

manipulation phase by sweeping sell-side

liquidity below the 2PM candles range

the price will push higher toward the

buy side liquidity above the 1H hour 2PM

candle this provides a great opportunity

to go long in the

market next I'll zoom into the 5minute

time frame to find an entry opportunity

for a long position

as you can see there's an order block on

the 5 minute time

frame which is the last selling candle

before the price started a bullish move

that broke out above the 15-minute

candle's high and closed above

it I'm going to place my buy limit order

at the the highest point of this order

block and wait for the price to activate

it for the takeprofit you can either set

it at the midpoint of the 1H hour time

frames range which provides a 2:1 reward

to risk ratio or at the highest point of

the

range which gives an R to ratio of

4.9 now let's see what happens next

as you can see the price has activated

our by limit order and we are officially

in the

market the first takeprofit is hit as

the price reaches the midpoint of the

range eventually the price hits the

second profit Target at the highest

point of the 1hour time frame's 2PM

candle range and the trade plays out

successfully now let's move on to the

next example

here we have the euro dollar 1hour time

frame on the screen as you can see we

have a perfect CRT model based on this

1H hour 9 a.m. candle we have all three

steps of the power of three accumulation

manipulation and

distribution after forming this large

candle as crt's range candle we can see

that the price swept the liquidity

accumulated below the first candle with

a wick then closed inside the range and

after price immediately pushed to the

high of the candle

range let's see if we were behind the

screen and monitoring the market how

could we enter the market with this CRT

model after identifying our range candle

and drawing the high and the low of the

range candle as the CR and crl we need

to zoom into the 15minute time frame to

gain a clearer view of price action and

also to monitor the Candlestick

better in the next step we should wait

for the 9:00 a.m. and monitor the price

action in this spefic specific time as

you can see price pushed lower and has

taken below of the range candle with 900

a.m. candle and after sweeping the

liquidity and after conducting the

manipulation phase pushed upside and

closed inside the range with this

bullish candle so we have a confirmed

CRT model formed during a key time hence

we know that the price is going to move

higher and touch the highest point of

the range candle so we are looking for

an opportunity to go long that we need

to zoom into to the 5 minute time frame

or 1 minute time frame to place an entry

to do that I am going to zoom into the

5-minute time frame and place my entry

at the highest point of this order block

and also put my stoploss couple pip

below the area and for setting the

takeprofit we have two

options we can aim for the equilibrium

or midpoint of the range candle or if

you seek for a more risky trade with a

higher reward to risk ratio you can aim

for the high of the candle

range as you can see after mitigating

the 5-minute order block the price

pushed higher and eventually touched the

candle ranges High providing a perfect

CRT model

entry that's it Traders thank you for

watching this video I hope you found it

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