Candle Range Theory Explained and Simplified | Easily Predict the Next Candle
Summary
TLDRIn 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
📈 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.
🔍 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.
📊 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.
Mindmap
Keywords
💡Candle Range Theory (CRT)
💡Accumulation
💡Manipulation
💡Distribution
💡Asian, London, and New York Sessions
💡15-Minute Chart
💡Candlestick Patterns
💡Key Levels
💡Timing
💡Entry and Exit Points
💡Stop Loss and Take Profit
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
informative and useful don't forget to
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and look forward to seeing you in the
next episode
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