What does a candlestick with a particularly long body signal?

Suppose you were looking for an opportunity to trade a trend reversal and saw a candlestick with a particularly long real body, in the direction of the trend. Would this signal that
[li]The market still has a lot of momentum in the direction of the trend, so a reversal is unlikely?
[li]The market is overextended and a reversal is likely?

I have seen both of these interpretations of a long bodied candlestick suggested in Steve Nison’s book ‘Japanese Candlestick Charting Techniques’, which seems contradictory. Can anyone please help me to understand this?

The only thing that is certain is uncertainty.
Sometimes a “candlestick with a particularly long real body, in the direction of the trend” will be a buying signal. Other times a “candlestick with a particularly long real body, in the direction of the trend” will be a selling signal.

Do you play golf?
What would Tiger Woods’ answer be to this question: What club would you use if you were 80 yards away from the pin?

His answer would be- DEPENDS.

Long story short, that’s my answer. DEPENDS.
Context trumps candlesticks.


If I see a long body candlestick, here are the questions that I will ask myself:

  1. What color?
  2. Where did it form?
  3. Are there any other candlestick pattern prior to that candlestick body?

Usually, I dont trade after a long body candle stick formed because:

  1. My risk/reward ratio is already off.
  2. When it formed it is usually hundreds of pips off away from a solid support/resistance line.

So, what I will do are:

  1. Wait. Sooner or later it will stop/slow trending up or down
  2. Then wait. Wait for candlestick pattern to form.
  3. Look. Look if the candlestick pattern form at a major resistance/support level.

So here is your takeaway.

  1. Dont try to trade after a long body candlestick pattern formed. Usually it is already off your risk/reward ratio.
  2. Know your support and resistance level.
  3. The momentum of the trend will usually die down after several runs. This will be followed by a dip or rebound.
  4. Observe for any candlestick reversal pattern at key support/resistance level.
  5. Set your risk/reward ratio.
  6. Trade!

Doesn’'t really matter.

If it doesn’t go with your plan, don’t trade it.

If you’re planning to do reversal trades using candle sticks. Stick with knowing the appearance of a real reversal candle.

Don’t think about other stuff that are outside your plan. It’ll just mess with you mentally.

Hi everyone,
Try reading “Japanese Candlestick Charting Techniques” - By Steve Nison
It will help with understanding of Candlestick techniques that can go a long way.
Let me know if this was helpful.
Cheers, V