A hands-on options curriculum covering real trading concepts. Read the lessons, work through examples, and test your knowledge.
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Lesson 7: 5.6: Candlestick Psychology & Order Flow Integration
Deconstruct what is happening behind the scenes of every candle in terms of institutional order execution.
1. Visualizing the Battle of Order Flow
Every candlestick is a visual record of a battle between supply (sellers) and demand (buyers). By analyzing the size of the body relative to the shadows, you can deduce the aggressive buying or selling pressure (order flow) in real-time.
For example, a candle with a large real body and no shadows indicates that the aggressive side did not face any limit orders strong enough to halt their progress. Conversely, a long wick represents trapped traders whose stop losses are now vulnerable.
2. Identifying Institutional Footprints
Institutions execute large orders over time, leaving footprints. A sudden series of wide-range candles with expanding volume indicates major institutional block orders being completed, establishing new fair value zones.
Click to enlargeTechnical Market Structure Blueprint
Interactively map key institutional Price Action patterns. Switch between the 4 technical blueprints below and click the glowing blue hotspots to dissect the market mechanics.
Pattern Technical Explainer
Select any glowing node on the technical chart to inspect the institutional structure details.
KNOWLEDGE RECONNAISSANCE
What does a long lower wick on expanding volume indicate about order flow?
More lessons in this module
- 5.0: Introduction to Candlestick Analysis
- 5.1: Single Candlestick Patterns
- 5.2: Double Candlestick Patterns
- 5.3: Triple Candlestick Patterns
- 5.4: Candlestick Continuation Patterns
- 5.5: Candlestick Reversal Patterns
- 5.7: Common Candlestick Trading Mistakes
- 5.8: Practical Candlestick Execution Strategies
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