The initial step when utilizing long wicks is usually to find the trend. In case the trend is lower, noticing a candle with long wicks at the top indicates a deeper possibility for the price to shift down toward the market. Moving with the downswing example, when the pair recalls and stops at the measure of conflict or a Fibonacci level, traders will stay for long wicks at the tops of candles creating the opposition brand for two reasons:
- Those long wicks point out the possibility pair to trade with the negative side of a trend.
- The top of that extended wick offers a sensible point for a trader to position their stop. The excuses for that stop positioning especially buyers convince and initiate the value to the peak of that wick but couldn’t extend it from that position. Therefore, making the stop above that wick is a point that includes a minimized chance of obtaining strike.
There is unclarity between traders’ ideal time of the graph, this technique might be used for day traders, they can check out 5- or 10-min time graphs. Swing traders may look at more intraday graphs like 2-hours or 4-hours graphs. considering long wicks producing at stages of support or opposition, especially if the pointer change on the way to a daily pattern, can result in an excellent advantage for the trader.
- Emerges often in every financial market
- Long wicks are simple to recognize
- Can’t be traded making use of long wick candle in segregation
- Call for connecting facts to trade with core value stages or parameter