So I think the candle wick of the price rejected is the most informative part of the candle than the body length, or even comparing body:wick ratio or wick:wick.
I’m speaking about this after observing that the text book candlestick patterns are right 1 out of 4 times. The rest of the time they are completely misleading, and even though all texts say ‘the patterns do not always give the exact same result’, what I think is that most patterns are sometimes just hiccups in the general direction of the market.
The way I think about price rejection is: in a candlestick, the prices that were rejected signify more than the prices that were accepted, because after a candle has grown long enough, anyone can jump in on the action, the initial prices that were rejected ultimately tell the story of which way market will go in the next candle. And yes, that overlaps with basic theory, but its another way to think about it.
I have an example of what I did here, starting at the red bar from the left, it pretty long, right? So thats a good sign. Next is a bull with a short upper wick. Meaning that high prices were rejected, but expect some bulls too. the next is the shameless bear/doji which is meant to predict unsurity. But if you look at the long lower wick, I know that with the previous information, I will expect a bull. And the next one, is a long scary one, but I don’t worry because there is clearly an upper price rejection, leading to a pretty long wick, not micro and not super long, but good enough to give context. So no matter how long the bar elongated up, I had a feeling bearish pressure was just taking a break and was about to return right back.
Thoughts?