In the world of forex trading, it’s common to come across long unfulfilled candles. These candles can be confusing for traders who are unfamiliar with their meaning. In this article, we’ll explore what long unfulfilled candles are, why they occur, and how to trade them.
What are long unfulfilled candles?
In forex trading, a candlestick chart is often used to display price movements. A candlestick chart is made up of individual candlesticks, each representing a specific period of time, such as one minute, one hour, or one day. Each candlestick has a body and two wicks, one at the top and one at the bottom.
A long unfulfilled candle is a candlestick that has a long body with little or no wick at the top or bottom. The candlestick represents a period of time where the price opened at one level, moved significantly in one direction, and closed at a different level. However, despite the significant price movement, the next candlestick does not continue in the same direction.
Why do long unfulfilled candles occur?
Long unfulfilled candles occur when there is a significant price movement in one direction, but the market does not continue in that direction. This can happen for a variety of reasons, including:
1. Market manipulation: In some cases, large traders or institutions can manipulate the market to cause a significant price movement in one direction. However, once they have achieved their goal, they may stop trading, causing the market to reverse.
2. News events: News events can cause significant price movements, but the market may not continue in the same direction once the news has been fully priced in.
3. Technical factors: Technical factors, such as support and resistance levels, can also cause significant price movements. However, once the price reaches these levels, the market may not continue in the same direction.
How to trade long unfulfilled candles
Trading long unfulfilled candles can be challenging, as it’s difficult to predict when the market will reverse. However, there are a few strategies that traders can use:
1. Wait for confirmation: Traders can wait for the next candlestick to confirm the reversal. If the next candlestick closes in the opposite direction, it can be a signal that the market has reversed.
2. Use technical indicators: Traders can use technical indicators, such as the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD), to identify overbought or oversold conditions. If the market is overbought or oversold, it may be more likely to reverse.
3. Place stop-loss orders: Traders can place stop-loss orders to limit their losses if the market does not continue in the expected direction.
Conclusion
Long unfulfilled candles can be confusing for traders, as they represent a significant price movement that does not continue in the same direction. However, by understanding why long unfulfilled candles occur and using the right trading strategies, traders can profit from these market movements. As with any trading strategy, it’s important to manage risk and use proper money management techniques.
