There’s Some Nuance To This Bullish Signal

There’s Some Nuance To This Bullish Signal

There is a very common assumption in chart analysis that candles with long wicks beneath them are bullish (see the highlighted candle in the chart below).

These types of candles often do have bullish implications. Rationale being, the bears tried to push price (much) lower during the candle but the bulls were able to overcome them, with price closing significantly above the low.

However, there is some nuance to this. These "long wicked candles" only generally work as bullish signals if price quickly runs away from the candle.

If price doesn't run away from the candle, it pays to remember the old adage "if price printed there, it can trade there".

Good trading!