Open High Low Close - Understanding Candlesticks
Summary
TLDRThis video covers the essential concepts of candle charts used in trading, explaining how to read candles based on their open, high, low, and close prices. It distinguishes between bullish and bearish candles and discusses three key types: directional candles, reversal candles, and indecision candles. The video emphasizes the importance of analyzing the body and wicks of candles to identify price trends and reversals. Real chart examples are used to demonstrate how different candle types behave on various time frames, aiding viewers in making informed trading decisions.
Takeaways
- 📊 Every candle in trading has an open, high, low, and close, which are essential to understanding price movements.
- 📉 A bearish candle forms when the close is below the open, indicating downward price movement.
- 📈 A bullish candle occurs when the close is above the open, showing upward price movement.
- 🔍 The three main candle types are directional, reversal, and indecision candles, each reflecting different market behavior.
- 📉 A bearish directional candle moves in one direction for most of the period, often having a small wick compared to the body.
- 📈 A bullish directional candle trends upward for most of the period, with a relatively smaller wick compared to the body.
- 🔄 Reversal candles show a change in direction, where the wick is larger than the body, indicating that price reversed during the time period.
- ⚖️ Indecision candles have small bodies with longer wicks, indicating that price fluctuated but closed near the opening price, reflecting market uncertainty.
- 🔁 Understanding how candles form on different timeframes (e.g., daily or 15-minute) can provide deeper insights into price action.
- 🔎 Recognizing patterns like directional moves or reversals over consecutive days helps traders anticipate market behavior and adjust their strategies accordingly.
Q & A
What are the four key components of a candle in trading?
-The four key components of a candle are the open, high, low, and close. These represent the opening price, the highest price, the lowest price, and the closing price within a specific time period.
How can you identify a bearish candle?
-A bearish candle occurs when the closing price is below the opening price, indicating that the price moved downward during the time period.
How is a bullish candle defined?
-A bullish candle is defined by the closing price being higher than the opening price, indicating that the price moved upward during the time period.
What is a directional candle and how can it be recognized?
-A directional candle shows movement primarily in one direction throughout the time period. For a bearish directional candle, price opens, makes a high, and then moves lower to close. For a bullish directional candle, price opens, makes a low, and then moves higher to close.
What characteristics distinguish a reversal candle from other types?
-A reversal candle has a large wick relative to its body. It shows a price reversal during the time period, meaning that the price moves in one direction and then reverses to close in the opposite direction.
What can a small wick relative to the body of a candle indicate?
-A small wick relative to the body often indicates a directional candle where price movement is more stable and trends in one direction during the time period.
How do lower time frames relate to higher time frame candles?
-Lower time frames contribute to the formation of higher time frame candles. For example, a daily candle might consist of smaller 15-minute candles showing the detailed movement of price throughout the day.
What is an indecision candle, and what does it signify?
-An indecision candle occurs when the opening and closing prices are close to each other, with long wicks on both sides. It indicates a lack of clear direction in the market during that time period.
How does understanding open, high, low, and close (OHLC) improve trading?
-Understanding OHLC helps traders interpret market behavior, identify trends, and make better decisions based on whether the price is moving upward, downward, or staying neutral within a time period.
What patterns might you expect after several directional candles in a row?
-After several directional candles, such as three days of expansion, it’s common to see a reversal or consolidation, where price movement may shift direction or pause for a period of indecision.
Outlines
📊 Introduction to Candlestick Basics
This section introduces the basic components of candlesticks in trading: open, high, low, and close. It explains how the relative position of the open and close defines whether a candle is bullish or bearish. The segment also emphasizes the importance of understanding these components, as they form the foundation for various types of trading strategies.
📉 Explanation of Directional Candles
Here, the video focuses on the first type of candle, the directional candle, where price movement happens in one main direction throughout a specific time frame. Both bullish and bearish directional candles are discussed in detail, with emphasis on how the body and wicks of the candles behave, usually showing smaller wicks compared to the body.
🔄 Reversal Candles and Their Characteristics
This section delves into the second type of candle: the reversal candle. Reversal candles have larger wicks compared to the body, indicating that price moves strongly in one direction before reversing. The explanation includes how reversal candles are formed on lower time frames and how they signal a potential change in market direction.
🤔 Indecision Candles: Market Uncertainty
This part covers the final type of candle, the indecision candle. It explains that when the market opens and closes at nearly the same price, with large wicks on both sides, it signals a lack of clear direction in the market. Indecision candles suggest the market is uncertain, and this concept is illustrated using examples from different time frames.
🔍 Analyzing Market Behavior with Candles
In this section, the video dives into how different types of candles, such as directional, reversal, and indecision candles, can be used to anticipate market behavior. Examples are provided, illustrating how understanding the patterns formed by candles across different time frames helps traders make informed decisions.
📈 Applying Candlestick Patterns to Trading Strategies
This segment concludes by tying together the concepts discussed earlier, showing how traders can apply the understanding of open, high, low, and close candles to predict market movements. The importance of recognizing patterns, including periods of expansion and consolidation, is emphasized to refine trading strategies.
Mindmap
Keywords
💡Open
💡High
💡Low
💡Close
💡Bullish Candle
💡Bearish Candle
💡Directional Candle
💡Reversal Candle
💡Indecision Candle
💡Time Frames
Highlights
Introduction to the video discussing Open, High, Low, Close of candles and how it applies to trading.
Definition of bearish and bullish candles based on the relation between the open and close prices.
Explanation of how every candle has an open, high, low, and close, which is essential for trading analysis.
The concept of a directional candle, where price moves in one main direction during the time period.
In a bullish directional candle, price opens, makes a low, trends higher, and closes at a high.
In a bearish directional candle, price opens, makes a high, trends lower, and closes at a low.
Smaller wicks relative to the candle body are common in directional candles.
A step-by-step walkthrough of how candles form on a lower time frame, focusing on how daily and 15-minute candles relate.
Reversal candles occur when price opens, trends in one direction, then reverses to close in the opposite direction.
A reversal candle often has a wick larger than the body, indicating significant price movement in both directions.
In the example shown, the daily candle shows price moving higher but then reversing, forming a bearish reversal candle.
Indecision candles occur when the price opens and closes close to the same level, indicating little market direction.
Examples of how indecision candles can form after a period of high volatility, where the market fails to find direction.
Discussion on the importance of recognizing patterns of three directional candles followed by either a reversal or consolidation candle.
Understanding the relationship between higher time frame candles and lower time frame movements helps traders anticipate market trends.
Transcripts
[Music]
how's it going everyone in this video we
are going to be talking about the Open
high low close and open low high close
of candles we'll first talk about
defining a bearish and bullish candle
and then we'll talk about the three
different types of candles that I focus
on let's get into the PDF but the first
thing you need to understand is that
every candle has an open high low and
close so for this specific time period
price went and the highest at WR was up
here making a high the lowest it went
was down here making a low and price at
the specific time opened right here and
closed here so if the close is below the
open then that is a bearish candle now
if the open is below the close that is a
bullish candle now every single candle
has an open high low close and it is the
foundation of trading let's talk about
the three different types of candles
that I focus on the first candle I focus
on is a directional candle and what that
means is price went one direction
throughout this time period for the most
part you can see we had an open we made
a high and then we continued lower for
the majority of this time period before
making a low and closing similarly with
a bullish candle moving in One Direction
we had an open we made a low
we continued in one direction for most
of this time period made a high and then
closed so what does this look like on
the lower time frames well for a bullish
directional candle we'll have an open a
low and then we'll continue or Trend in
one direction to make a high and then
close and the one thing to notice is
generally with directional candles this
Wick is smaller relative to the body
right it's how it's going to be now with
a bearish directional candle we'll have
an open we'll make a high above that
open and we'll have a continued move
down to then close once again a smaller
Wick relative to the body let's hop into
trading View and go over a few examples
of this so here we are in trading View
and the first candle we're going to take
a look at is this one right here so you
can see price opened made a high went
lower throughout the time period and
then closed here since the close is
below the open it is a bearish candle
now let's go take a look at what the
looks like on a lower time frame so down
here on the 15-minute chart in relation
to the Daily candle let's see how it
forms so the first thing we're going to
do is go ahead and Mark out this opening
price here at 1,800 so now that we have
that marked out let's play this through
and watch how the candle forms you can
see throughout Asia we kind of
accumulate here we make a high and then
we get displacement down right so open
high now if this candle's going to
continue lower I'd like to see this high
High left and to trade lower throughout
the day and you can see we're trading
lower we get New York open we go even
lower and you can see how this move
higher here is just to create the wick
of this daily
candle and there as we close the day you
can see we had an open we made a high we
went down we made a low and then we
closed the candle you can see every time
frame that has a candle there is a lower
time frame making that candle
on The Daily I like to use the 15minute
time frame let's go to a few more
examples so now if we're looking at the
daily chart here once again and we see
that price wretch above and then close
back inside here what am I anticipating
for the next day to be bearish so if I'm
bearish then I want to see what type of
candle well an open I low close cuz I
want to see a one directional move down
so do we get that we do so what does
this look like on a lower time frame so
you can see here this was the previous
day here is the new day open so we want
to see what open high low close and if
you notice right here what do we not
have we have an open our high is the
exact same price as the open we don't
currently have an upper wick on the
daily chart as we move ahead did we just
create the wick on the daily chart let's
see and then we get the continuation
lower so you can see open we made a high
one directional move make a low and then
close so let's continue this into the
next day if we're still bearish what do
we want to see open high low
close so as we continue this ahead into
the New York
session what do we get we get a move
higher sweeping these previous highs
around equilibrium of the previous day
and then displacement lower so open I
we'd want to see a move lower to make a
low and then close and here is where
I'll use projections or something else
to give me a projected
move and you can see it went far beyond
that projection we made an open high low
let's see if we close here or where we
go and we just close right in here
hopefully that makes sense open high low
close now this works on all time frames
for instance we are now looking at the
monthly candle using the daily chart as
the lower time frame candles so if we're
going to move higher we want to see what
open low high
close and you can see there we got our
open low high close then we open up the
new month and we make a move higher at
the start and then that leads us into
our next candle type so let's go back to
the PDF so the next candle type I focus
on is a reversal candle and so what this
looks like is we have an open a high a
low and close or an open low high close
and what do you notice about this Wick
relative to the body well the wick is
larger than the body you notice how with
the directional candle our Wick was
smaller than the body with the reversal
candle it is different so what's
happening on the lower time frames here
while we open we're making a move higher
so it's looking like a directional
candle up
and in this time period we went higher
and then price reversed all the way down
here to then close so price went up then
reversed or made a reversal candle
similarly open went down looking like a
bearish directional candle then reversed
to make a high close if we look at this
on a lower time frame open made a low
was looking like expansion down price
reversed to then make a high and close
so open low high close with a bearish
revers candle open high low close was
looking like a bullish directional
candle then price reversed so when you
see a wick that means on a lower time
frame price went up and then down let's
hop into the charts and go over a few
examples of these now back where we left
off with our previous example on CL
daily chart looking at the monthly open
high low close what do we notice about
this low here we barely made a low right
in the single daily candle we just kind
kind of moved higher so we have an open
high let's see what
happens so if you notice what happens is
we move higher and then price reverses
to go lower we have an aggressive move
out of a range and an aggressive move
back into a range let's see how this
month
closes and you can see we close as a
bearish reversal candle what happens at
the start of the next month we get an
expansion move down off of that reversal
now if we go back in replay what do we
notice about our first example in the
video this candle looks a lot like that
monthly candle right where we have an
expansion up price then moves open high
low close forming a bearish reversal
candle so then I can anticipate what a
bearish directional candle after that so
if we go down to the lower time frames
here so now down here on the lower time
frames if we watch this candle form you
can see it's pretty choppy but what
happens is price moves higher we make a
high
and then the most important part here is
we move lower and where do we
close we close back down here making a
bearish reversal candle so you can see
here price went higher reversed and then
closed below its opening price so let's
take another look at this example what
happens as we near the New York session
we get an aggressive move lower right so
right now it's looking like open high
low close right but this is where
Direction bias is important because if
I'm bullish and seeing an opposing move
down in New York I'm thinking a New York
reversal to make a what bullish reversal
candle what happens here we make a low
we get our change in the state of
delivery and then where do we go we go
higher so you see how this candle looks
open low high close right where we
finish off so let's go back to the PDF
and talk about the last candle type I
look for
now the last candle type I look for is
an indecision candle and what does that
mean means that price opens makes a high
or a low and then closes very close to
the opening price so you can see how we
have a longer wick on each side and the
body is fairly small that means
throughout this time period or candle so
for instance if this is a daily candle
it means that price really didn't go
anywhere through that day right because
it opened and closed relatively to the
same price so we look at an example of a
bullish one right here make a low make a
high make a low but the most important
things we open and close right next to
each other so there's no real Direction
in the market and similar thing here
with a bearish indecision candle the
open and closing prices are relatively
close to each other making a very small
body or not much Direction in the market
let's go into the charts and look at a
few examples of these so here we are on
a gold 15minute chart and we'll be
watching The Daily
candle you can see as we play this
through we don't really do a whole lot
right we're chopping around what are we
making a little broadening
formation and what happens well we just
sweep out both sides of the range so
right now we let this come back and
close where do we return to right around
the opening price right so larger wick
on each side and opening and closing
near each other so what does that show
there is no direction right now in the
market it's just kind of sitting around
so here in our next example what do we
notice about the previous range well we
had a very large previous range see that
500 points on inq so with a lack of news
or volatility following a range that is
very large a lot of times we get an
indecision
candle you can see there is no real
movement in the market and what happens
is we just come and make a high and a
low price can't go anywhere and we will
end up closing closing right around the
opening
price if you know what a Seek and
Destroy looks like or a broading
formation we'll just kind of get that
pattern right the price will take
external go back to equilibrium with
range so here we are on CL daily chart
and I just wanted to explain a few
things we went over the three candle
types and generally I don't like to see
more than three of those candle types in
a row so if we're getting 3 days of
expansion or a directional move then I
like to see a different candle type or a
reversal
consolidation so let's see so you notice
here we get 3 days of expansion right so
open high low close open high low close
open high low close right so the
following day what happens well what do
we print we sweep out previous day's low
and close inside but more importantly
open low on that sweep make a high and
then close so what are we printing a
bullish reversal candle so do we see a
reversal well let's see the next
days open low high close we're closing
over this previous bar you remember my
daily bias
video open low high close closing over
now do we get a third day we do open
high low close now what happens on this
next day following 3 days this isn't
great expansion but three up closed
candles we get a consolidation right so
you see how the opening price and
closing price are right next to each
other see what happens well now we sweep
previous day low into a fair value Gap
and what do we notice about this candle
open low high close and what is that
forming a bullish reversal candle and in
this case it's reversing from the
retracement to then continue higher and
there we get a move higher so hopefully
that shows you how you can add it to
other Concepts just the understanding of
open high low close and if you go down
to the lower time frames you kind of
already know what they look like for
instance here I know we opened we made a
high back at equilibrium of the previous
day then from there we found expansion
lower and then we closed in the lows
here we made a move higher to then go
lower and close so you can kind of start
to picture the lower time frames just
understanding the Open high low and
close now I hope you found this video
helpful if you did please consider
liking and subscribing and I'll see you
guys in the next one have a a good one
関連動画をさらに表示
Morning Star Candlestick Pattern | Basic Price Action Roadmap | Part 3
The ONLY Candlestick Video You’ll EVER Need (Step By Step Guide)
Candle Range Theory | CRT | The NEW Silver Bullet For Struggling Traders
Perfecting LTF Orderblock Entries With CRT - Candle Range Theory - ICT Concepts
Boot Camp Day 2: Candlesticks
How To Read Candlestick Charts FAST (Beginner's Guide)
5.0 / 5 (0 votes)