Reality check: no candle guarantees a win. Context + level + confirmation is what improves odds.
1) Rejection candles (pin bars / long wicks)
A long wick shows price tried to go somewhere and got rejected. These work best at support/resistance or after a liquidity sweep (taking an obvious high/low).
- Trigger: break of the rejection candle’s high/low (directional)
- Invalidation: beyond the wick (or beyond the zone)
2) Engulfing candles (shift in control)
An engulfing candle shows a stronger response than the prior candle. It’s most useful when it aligns with structure (for example, the first strong push after CHoCH).
- Trigger: follow-through or a retest of the engulfing range
- Invalidation: acceptance back into the range in the wrong direction
3) Impulse candles (momentum + acceptance)
Big candles are not “buy now” signals. They’re evidence of acceptance. After an impulse, you often get a pullback into a key level (break and retest).
- Best use: as breakout confirmation, then trade the pullback
- Trap: chasing the candle top into resistance
Where candles fail
- in low-liquidity chop
- mid-range with no key level nearby
- right before major news releases (random wicks)
A prompt for AI candle reading
Analyze this chart screenshot for candlestick context.
1) Identify the most important candle(s): rejection / engulf / impulse
2) What key level or structure context makes it meaningful?
3) Give a trigger + invalidation + target zone.Related posts
- Support & Resistance Trading (Simple Levels That Actually Work)
- Break and Retest Strategy (How to Trade It Clean)
- RSI Divergence
- Market Structure: BOS vs CHoCH
- AI Trading Chart Analysis Workflow
Get ChartsGPT
Turn your screenshot into key levels, scenarios, trigger, and invalidation in seconds.
About ChartsGPT
ChartsGPT is an AI chart analysis app designed to turn screenshots into structured levels and scenarios. For support, contact anthonyvvza@gmail.com.