Candle Range Theory Explained
Summary
TLDRIn this video, Solomon King explains the Candle Range Theory, a popular concept in trading that rebrands the Power of Three theory. He emphasizes that each candlestick represents a range, encapsulating the market's movement within a specific timeframe. King illustrates how to spot high and low-probability candle ranges and their importance in aligning with key trading levels. The video also explores different scenarios of candle range formations and practical strategies for using this concept effectively in trading. King concludes by highlighting the significance of aligning candle ranges with key levels to optimize trading decisions.
Takeaways
- đ The concept of Candle Wrench Theory is introduced as a rebranded version of the popular 'Power of Three' concept in trading.
- đ A candle represents the entire range of transactions that occurred within a specific time frame, such as a day or 15-minute period.
- đ The importance of understanding candle range is emphasized for traders to interpret market movements accurately.
- đ The video aims to teach viewers how to identify high and low probability candle ranges to align with their trading strategies.
- đ The theory suggests that a candle's range can be broken down into three scenarios: one, two, or three candle formations, each representing different market behaviors.
- đ The 'Power of Three' concept is explained through the Accumulation, Manipulation, and Distribution (AMD) model, which helps in identifying trading opportunities.
- đ Key levels or points of interest are crucial when applying the candle range theory to ensure trades have a high probability of success.
- đ The video provides practical examples of how to spot candle range formations and how they align with market sessions like the Asian, London, and New York sessions.
- đ The presenter shares insights on how to blend the candle range theory with the Kill Zone strategy for better trading outcomes.
- đ The video concludes by emphasizing the need for confirmation and a key level when applying the candle range theory to trading decisions.
Q & A
What is the main topic of Solomon King's video?
-The main topic of Solomon King's video is the concept of Candle Range Theory, which he aims to explain in a way that is understandable to all viewers.
Why is Candle Range Theory important for traders according to the video?
-Candle Range Theory is important for traders because it helps them interpret price movements and identify high and low probabilities of candle ranges, which are crucial for making informed trading decisions.
What is the significance of the daily candle in the context of Candle Range Theory?
-The daily candle represents the entire transaction that happened in a 24-hour period, encapsulating the overall bullish or bearish sentiment for a particular currency pair within that timeframe.
How does Solomon King relate Candle Range Theory to the Power of Three concept?
-Solomon King suggests that Candle Range Theory is essentially a rebranded version of the Power of Three concept, as both involve understanding the dynamics of price movement within a candle's range.
What are the three scenarios in which Candle Range Theory can be observed?
-The three scenarios in which Candle Range Theory can be observed are: 1) within a single candle, 2) in two-candle price action, and 3) in three-candle price action.
What does the acronym 'AMD' stand for in the context of the video?
-In the context of the video, 'AMD' stands for Accumulation, Manipulation, and Distribution, which are stages in the price action that can be identified within the Candle Range Theory.
Why is it important for the Candle Range Theory to align with a key level?
-Aligning the Candle Range Theory with a key level is important because it helps traders identify high-probability trading areas where price is likely to react or reverse, increasing the chances of successful trades.
How does Solomon King demonstrate the practical application of Candle Range Theory?
-Solomon King demonstrates the practical application of Candle Range Theory by analyzing charts and showing how price movements align with the theory's principles, especially in relation to key levels and market sessions.
What role do market sessions play in the Candle Range Theory according to the video?
-Market sessions play a role in Candle Range Theory by providing specific timeframes, such as Asian, London, and New York sessions, where different stages of Accumulation, Manipulation, and Distribution can occur within a day's trading.
What is the advice given by Solomon King for traders using Candle Range Theory?
-Solomon King advises traders to ensure that the Candle Range Theory formations align with their trading concept and strategy, and to look for confirmations before taking trades based on the theory.
Outlines
đŻïž Introduction to Candle Range Theory
In this paragraph, Solomon King introduces the topic of Candle Range Theory, explaining that it's a concept frequently requested by his audience. He emphasizes the importance of understanding this theory, not just in theory but also in practical trading on charts. Solomon sets the goal of the video: to explain what candle range is, its significance for traders, and how to identify high and low probability candle ranges that align with specific trading strategies.
đ The Power of Three in Candle Range Theory
This section discusses the concept of accumulation, manipulation, and distribution (AMD) in Candle Range Theory, also known as the Power of Three. Solomon explains that Candle Range can be seen in one, two, or three candlestick price actions. He describes how a single candlestick can encapsulate a complete trading scenario, showing price movements such as accumulation, liquidity sweeps, and distribution within a trading day. This paragraph sets the stage for identifying different patterns within the Candle Range Theory.
đ§ Key Levels and Alignment in Candle Range Theory
Solomon emphasizes the importance of aligning Candle Range Theory formations with key levels or points of interest, such as order blocks or fair value gaps. He explains that trading the theory effectively requires identifying these levels, as they dictate the potential success of trades based on Candle Range patterns. He provides practical examples, showing how price actions like sweeping liquidity and shifting market structures play out in real trading scenarios, reinforcing the theory's application and effectiveness.
đ Candle Range Theory in Daily Trading Sessions
In this paragraph, Solomon explores how Candle Range Theory applies to different trading sessions throughout the day, particularly the Asian session, which often forms the initial range. He describes how subsequent sessions, like London and New York, involve liquidity sweeps and distribution phases, aligning with the theory's principles. This segment emphasizes the repetitive and predictable nature of these patterns across different timeframes and trading sessions, making it a valuable tool for traders seeking consistent strategies.
Mindmap
Keywords
đĄCandle Range Theory
đĄPower of Three
đĄHigh and Low of the Day
đĄKillzone Strategy
đĄLiquidity
đĄMarket Structure
đĄOrder Block
đĄFair Value Gap
đĄAccumulation, Manipulation, Distribution (AMD)
đĄKey Levels
Highlights
Introduction to candle range theory and its significance for traders, emphasizing practical application on trading charts.
Explanation that a candle represents the price range within a specific timeframe, such as a daily candle covering 24 hours.
Introduction of timeframes and how lower timeframes reveal detailed price movements within larger candles.
Comparison of candle range theory with the power of three concept, stating they are essentially the same.
Three scenarios of candle range theory: single candle, two-candle price action, and three-candle price action.
Explanation of how to break down a candle into its components: open, high, low, and close, and their significance in trading.
Focus on key levels, including order blocks and fair value gaps, as important areas where candle range theory becomes relevant.
Practical example of price action using a daily candle from the gold chart to demonstrate candle range theory in action.
Key point that candle range theory aligns with higher-probability trades when it coincides with points of interest like order blocks.
The importance of sweeping liquidity, identifying key price movements that trigger shifts in market structure.
Demonstration of how price often respects fair value gaps and other key levels, and how this concept aids in trade planning.
Insight into how the Asian session often forms a range, and subsequent sessions manipulate or distribute price.
Detailed breakdown of accumulation, manipulation, and distribution (AMD) formation within a single candle and its trade implications.
Candle range theory's ability to highlight previous day highs and lows, helping traders identify draw on liquidity.
Final advice: Align candle range theory with key levels for high-probability trades, especially after sweeping liquidity.
Transcripts
hello folks welcome back to the channel
it's Solomon King here and in today's
video I'll be covering the concept of
candle wrench Theory this is something I
have gotten request from so many people
asking me to make this video and I feel
like let me go ahead and explain it in a
broader way so that every one of you
would be able to understand what exactly
is candle wrench Theory so my goal in
this video is to basically give you an
idea of what exactly is candle range how
important it is for you as a Trader
because that is the consummation of it
all if you will not be able to interpret
it on your chat there is no need for
knowing the theory I can just make the
video for Content sake but if you cannot
bring it into reality on your charts
then it's of no use then the last thing
is that I will talk to you
about how to spot a high probability
candle range and then low probability
candle range of course you will not be
trading every candle range you need the
ones that properly align with your
trading concept and strategy and that is
why we are trading in this industry if
we cannot take trades that will give us
good results then we are basically
wasting our time so this concept
recently got popularity on the internet
especially Trading in space and even
though this is a concept that even a new
be is aware of uh the name and the title
whatever was given to it was just a
rebranding all right so in simple term
whenever people talk about candle range
Theory what they are basically saying is
that a candle is simply a range all
right a candle is simply a range and
that brings us to the idea year of time
frame so this is a daily candle let me
start by that and what this is saying is
that the entire transaction that
happened in this day that is 24 hours
right is represented in this
candle one Candlestick and let's assume
this is a bullish candle that means the
entire transactions that happened in the
last 24
hours was bullish in simple term if that
particular currency PA GBP USD for
example is represented here that means
GBP has been strong throughout the 24
hours throughout the last 24 hours and
that is the receipt now if we break down
this guy into the lower time frame this
is the 15minute time frame right we're
going to see the entire price move
movement in such a way all right price
had a break off structure break off
structure even a shifting Market
structure everything that happened that
was represented within this daily candle
is captured
here all right so what this is basically
saying is that a Candlestick is simply a
range that means it has the low or where
we saw this and the high the highest
level that that candle went to that is
why whenever we are taking a trade in a
day we have where the low of the day or
the high of the day is formed and we
know how to trade it accordingly
especially for example if you have
followed my videos on the Killzone
strategies you will know that the London
Killzone has the highest probability of
creating either the high of the day or
the law of the day according to ICT now
this same candle wrange theory is the
rebranded or another name given to our
popular power of threee
Concepts because everything that is
covered in the candle wrench theory is
captured in the power of three concepts
as a matter of fact I have watched a lot
of ICT videos and and I have personally
traded ICT concepts for a while but I've
never really really had ICT mentioned
about the candle range Theory I don't
know if I am wrong you can correct me
but then what ICT thought is the power
of three concepts is the same thing I
hope you understand this so how can we
really spot it the reality of it now
there are three scenarios of this candle
wrench Theory which I want to show you
please pay attention to it in detail
look at these three different scenarios
I hope you can remember your
accumulation manipulation and
distribution this is a popular concept
where we have the AMD formation now
there are three different scenarios that
a power of tree can be formed or the
candle wrench concept can be formed we
can find candle wrange Concept in one
single
candle all right in one single candle we
can find it in two candle price action
and we can find it in three candle price
action let me give you a very simple
scenario I will go to my chart don't
worry we're going to do practicals we're
going to spot it and how important it is
for our trading as a general so look at
this the first
concept price start
started this is the lowest area but this
is the open for this bullish candle
price opens boom it
ranged then it went
lower then it went
higher all right and then it came back
and
closed at this
point are you now seeing what I'm saying
the candle range Theory let me adjust
this one so if you break down this
candle you have price
accumulating then sweeping the liquidity
below here if you break it down in the
lower time frame right and boom it went
High creating the highest level leing
area of liquidity here money and it
closed right here
the open the low the
high this is one Candlestick CRT which
is the candle range
Theory you can find it on one
Candlestick just like this example you
see price opened from here all right it
moved High to that area after sweeping
liquidity because this is mostly a range
and boom it went
high and closed around
here if you break it down to the time of
the day this is the
popular power of threee concept for one
Candlestick of a day it starts from a
range within the Asia this is why the
Asian time is mostly known as a range
let me give you a proper delineation of
what I'm trying to explain so if you
Asian time starts as a range and
manipulation comes
in after the Asia has
closed this is why I said a
Candlestick can be seen in this simple
format and then distribution comes
in distribution comes in during
word London SL New York so Asia comes as
a range let's have it here let's have it
Asia comes as a
range and
London comes with the manipulation which
is creating the low of the day you
remember the low of the day and
distribution then the close of that day
what is it called the candle range
Theory candle do is arrange the entire
price movement you can delineate don't
worry you will have every single detail
properly given to you in this video so
sweeping liquidity and it went up so in
this
same understanding we can also watch
other candle range formation that is not
only one
Candlestick all right the second type is
this one where price
went above the previous Day candle
clearing the high or the low in
different scenarios now if we are going
if we actually on a bullish scenario
clearing the high of that and then
targeting the drawn liquidity
below clearing the
high targeting the drawn liquidity
below all right I will talk to you about
how to spot the most important one
because we need key levels that this
will play out with properly we need key
levels that this will play out with
properly what I mean by key level is
basically your point of interest when I
go for the practicals you're going to
see it so right here you have this one
the to scenario is when price plays the
same and it Contin downward to Target
the draw liquidity you can do this same
tempting for a bullish scenario so these
are the three types or the three ways we
can sport candle range Theory all right
candle range Theory so how important it
is the candle range Theory formation
must align with your point of interest
if price is sweeping liquidity and
trading into for instance an order block
by this site or a feir value Gap then
this concept will play out perf L
because we are going above this sweeping
liquidity hitting the point of
Interest all
right and then we have a shifting Market
structure then we take it for the
bearish movement let me go to my chart
and show you because I don't want to do
too much of theoretical part of this
let's go to the Chart all right so this
is a practical example of what I was
showing you now look at this particular
scenario all right
price traded
below the low of this daily candle this
is gold the daily candle price have
traded below the low of this candle
which is where the liquidity is
resting and after that we saw price
going above pushing upward what area did
we locate this bullish order Block
Please take note of how price is
trading and
respecting this
concept so that particular bullish order
block is where price traded into and
quickly moved up this
is the second type I showed you price
pressing below the low before going to
the opposite direction this is it again
look at this one we have
this price clearing the liquidity above
trading into this area rejection block
boom and what
happened quickly moving in the opposite
direction the same thing
here the same thing here moving in the
opposite direction
boom moving in the opposite direction
now if you go through your chart whether
in the daily time frame in the 4our time
frame you're going to see this happening
time and again and again candle range
Theory
clearing this highs trading into this
area before crashing
down you see oh this one has not reached
that point of interest but then it's
something that if you go through your
chart you're going to see it time and
again and again you see the T type of or
the T scenario where you have three
candles you see these ones price going
above the previous day high and then
targeting the low all this draw on
liquidity starting from the internal
draw on liquidity and finally
reaching to that area so candle range
theory is
basically those of you that are trading
previous day high previous day low and
then that concept is what has been
rebranded to the candle range Theory
concept but it must be aligning with a
very important or it must be aligning
with a key level all right look at this
one price have
this the body of the candle look at
this this
Candlestick pushing into where the fair
value gap which is the point of Interest
and price went from there so those of
you who are trading the previous Day
candle high if you sweep the previous
Day candle high or you sweep the
previous Day candle low you target a
point this is the same concept you know
price going above it and then crashing
downward so when you spot these things
they can be aligned in such a way that
you can use it for trading so now let's
talk about how we can align this with
the times of the day
with the times of the day all right is
very very important now let's look at
this particular scenario this is the
candle range theory for a day the one I
told you about the AMD I used to use
this indicator for trading this same
concept of candle range Theory now you
can divide it into sessions where we
have the Asian station the Asian station
is basically formed like a range for the
day this is the range the high and the
low and what do we look out for if we
come to the next session we basically
look out for the sweep of liquidity that
is resting above or below it which is
popularly known as the
manipulation and the
distribution it's a simple concept that
repeats itself often times and you can
see it on your chart you can literally
spotted without any stress all right the
candle range Theory formation here you
can see it happened right here price
targeting the LW of Asia this one is
simply for the day and what did we see
boom it went up to that area now this is
the same scenario we are seeing so this
same scenario if you bring it in a
Candlestick formation you will see it
something like this the candle body and
this is the
high this is the low manipulation all
right the open and then it ranged it
went below to sweep liquidity below just
a little bit and then boom it closed as
a bullish candle this happens many times
of the day you see price have
accumulation manipulation and it
distributed to this side all right so
you see this happening time and again
and again the power of three concept is
the same thing as the candle range
Theory you have price sweeping the
liquidity going into a key level and
then trading either to the next
direction to distribute or giving you a
perfect thread entry so always look for
a confirmation in
conclusion when you have your candle
range let's say this is the
range and you trade into either a fair
value Gap or a key level a key level
must always be there a key level whether
you're looking at it from the 4our time
frame or from any time frame the key
level is to basically help you know
whether that particular area is a high
probability area Because by the time you
sweep either the high of that candle or
the low of the candle if you don't have
any key level level that will be
important for price to bounce back from
it is going to be futile price is going
to go up so whenever you have price
trading and sweeping liquidity above or
below the previous day high into a key
level or a point of interest and having
a shifting structure you can easily take
the trade from there and that is my
basic understanding of the candle range
Theory nothing more nothing less if you
can use this and blend it with your Kill
Zone strategy power of threee is almost
the same thing all right thank you very
much guys I just tried to share with you
and show you what exactly it is see you
in my next video
Voir Plus de Vidéos Connexes
Candle Range Theory Explained and Simplified | Easily Predict the Next Candle
Candle Range Theory | CRT | The NEW Silver Bullet For Struggling Traders
ICT's 2022 Mentorship Program - Lesson Six Review
Perfecting LTF Orderblock Entries With CRT - Candle Range Theory - ICT Concepts
The Strategy I Wish I Knew as a Beginner
How To Select CRT Candles Perfectly - Full In Depth Guide - ICT Concepts
5.0 / 5 (0 votes)