Speaker A
Today, we're going to be talking about another fundamental part of the technical analysis that I use every single day, and that is wicks. So, when I say wicks, I literally mean every single wick on every single candlestick. And
Learn how to identify and use wicks in technical analysis for better trade entries and market understanding.
Key Takeaways
- Treat every wick like a fair value gap for technical analysis.
- Focus on big wicks relative to surrounding smaller wicks for trade signals.
- Identify wicks that hold price action multiple times before breakout for stronger setups.
- Breakout and inversion wicks can be used as entry points with tight stop-losses.
- Filtering wicks based on size and price behavior improves trading accuracy.
Summary
- Wicks on candlesticks are fundamental in technical analysis and should be treated like fair value gaps.
- Each candlestick has two wicks, but traders need to filter which wicks are useful for analysis.
- Big wicks are defined relative to surrounding smaller wicks and are more significant for trading decisions.
- Wicks that 'hold the move' by supporting price multiple times before a breakout are more reliable.
- Wicks can act as inversion or breakout points, providing potential entry signals.
- The video explains criteria to identify which wicks are important based on size and price action.
- Breakout wicks often serve as common entry points in the market.
- The concept of wicks is linked to higher timeframe levels but is introduced gradually.
- Using wicks properly can allow for tighter stop-loss placement and better risk management.
- The video is part of a boot camp series that builds on prior concepts like fair value gaps.
Chapters
- 00:00Introduction to Wicks in Technical Analysis
- 00:39Relation Between Wicks and Fair Value Gaps
- 01:51Treating Wicks Like Fair Value Gaps
- 03:06Using Wicks as Inversion and Breakout Points
- 04:04Criteria for Filtering Useful Wicks
- 04:38Examples of Big Wicks and Their Significance
- 05:40Breakout Wicks as Entry Points
- 06:37Secondary Criteria: Wicks That Hold Price Moves
- 07:19Summary and Practical Use of Wicks in Trading
Full Transcript — Download SRT & Markdown
Speaker A
what you'll immediately notice is that there's a lot of wicks, right? There's two wicks per candlestick. So there has to be a way to filter them out to only look at the wicks that we want to use that could be useful for us on a
Speaker A
what you'll immediately notice is that there's a lot of wicks, right? There's two wicks per candlestick. So, there has to be a way to filter them out to only look at the wicks that we want to use that could be useful for us on a
Speaker A
know what fair value gaps are, go ahead and watch the prior videos in this boot camp and you'll see what fair value gaps are. But every single wick on every single candle should be treated like a fair value gap. So, that means a lot of
Speaker A
day-to-day basis. And that's what we're going to be talking about today. So, the very first understanding that I want you to have, though, is that every single wick in the marketplace should be treated like a fair value gap. So, if you don't
Speaker A
be used as an inversion fair value gap. Okay, I'm going to stop calling them fair value gaps to avoid confusion.
Speaker A
know what fair value gaps are, go ahead and watch the prior videos in this boot camp and you'll see what fair value gaps are. But every single wick on every single candle should be treated like a fair value gap. So, that means a lot of
Speaker A
the place. So, how do we filter wicks out to know exactly which ones to use considering that there is so many all over the place? What is the criteria that we want to use to mark these wicks?
Speaker A
things, right? First and foremost, it means that yes, they have the same three levels inside of it, just like a fair value gap does, where price could come into those levels and hold. If price closes over the top of a wick, it could
Speaker A
around it? So, if I point out this wick right here, would you class this as necessarily big? Well, the one right before it is bigger than it. The one right after it is relatively smaller than it. This one's bigger than it. So,
Speaker A
be used as an inversion fair value gap. Okay, I'm going to stop calling them fair value gaps to avoid confusion.
Speaker A
surrounding candles, a couple candles besides it in each direction, you'll notice how every single one of them have smaller wicks on all around them. So, a big wick just means that the surrounding candles have much smaller wicks than it.
Speaker A
They're just wicks. But you treat them identically to fair value gaps. So, you close over it, it could become inversion. You have the same three levels inside it, etc., etc. But again, there's hundreds, if not thousands, if not tens of thousands of wicks all over
Speaker A
right here, which is big. Uh, we have this one right here, which is big compared to the one surrounding it. This is this is big, but for a reason that we'll get into in a minute, we would never be looking at this. Uh, we have
Speaker A
the place. So, how do we filter wicks out to know exactly which ones to use considering that there are so many all over the place? What is the criteria that we want to use to mark these wicks?
Speaker A
example and this is our first criteria to understanding which particular wicks to look at. Now this is great and all but there's kind of a secondary criteria if you want to use them as inversion or breakout wicks and that's that they hold
Speaker A
So, the very first criteria that we want to look at is if they're big. This sounds stupid. It sounds very simple. It is very simple. So, what I mean by big is it big relative to all the wicks
Speaker A
So what do I mean by held the move. So if we for example take a wick like this one right here, okay, and we highlight it and we drag it over the chart right here. What you'll notice is that this
Speaker A
around it? So, if I point out this wick right here, would you class this as necessarily big? Well, the one right before it is bigger than it. The one right after it is relatively smaller than it. This one's bigger than it. So,
Speaker A
the majority of the move that held the most move is going to be the one that you want to pick for your inversion wicks. So, this one can be used on the opposite side to then hold you up. And
Speaker A
I wouldn't really call this wick right here necessarily a big wick at all. However, if we take a look at something like this wick down here, or this wick right here, or this wick right here, or this wick right here, if you look at the
Speaker A
Whereas, we wouldn't use this wick here because this only held the move one time versus this one right here, which held the move one, two, three times before it broke out. So, this lower one would be the correct wick in terms of turning
Speaker A
surrounding candles, a couple candles besides it in each direction, you'll notice how every single one of them has smaller wicks all around them. So, a big wick just means that the surrounding candles have much smaller wicks than it.
Speaker A
a trade off of it in the direction that you want to go. So if you want to go down, if you want to take a trade a short off of a wick, you're looking for relatively the biggest up wick in the
Speaker A
Okay, hopefully that makes sense. So, when we look at this chart right here, the wicks that stand out to me as big are as follows. We have this one right here, which is relatively big compared to the one surrounding it. This one
Speaker A
that held majority of price action, which is actually this one back here, which again, you would never mark this one in terms of um it being you would never mark this one in terms of it being a big wick, which is right
Speaker A
right here, which is big. Uh, we have this one right here, which is big compared to the one surrounding it. This is big, but for a reason that we'll get into in a minute, we would never be looking at this. Uh, we have
Speaker A
times retest before it continues higher. And these breakout wicks are very often some of my most common entry points uh in terms of the entire market. And don't worry, we'll have an entire video going over entries for every single piece of
Speaker A
this as a wick that's big compared to the ones surrounding it. We have this, which is big compared to the one surrounding it, and we have this one being big compared to the one surrounding it. So overall, these are the big wicks on this little
Speaker A
chart. Generally, um, going into the future, we'll specifically be talking about wicks that come off of high time frame levels, but I don't want to jump too far ahead in this boot camp just yet. Uh, however, just keep that in your
Speaker A
example, and this is our first criteria to understanding which particular wicks to look at. Now, this is great and all, but there's kind of a secondary criteria if you want to use them as inversion or breakout wicks, and that's that they hold
Speaker A
price comes into the midpoint right here and price sells off. If you're looking for a wick to hold you up, you're looking for the biggest wick on the bottom to hold you up, which happens right here, or it happens right here.
Speaker A
the most price action. So, this criteria point I'm going to call held the move.
Speaker A
did. In this case, this one did right here. Um, etc., etc. So that is how I use and identify wicks in the market.
Speaker A
So, what do I mean by held the move? So, if we, for example, take a wick like this one right here, okay, and we highlight it and we drag it over the chart right here. What you'll notice is that this
Speaker A
into a high time frame level here, and then you broke up. Generally, you would never be looking at this wick right here.
Speaker A
held the majority of the move before the breakout. So, this held the move in one candle. So, this held a move in one candle, in two candles, in three candles before it ever broke out and closed above that wick. So, the wick that held
Speaker A
opening price of this order block. So where is it going to reach down into?
Speaker A
the majority of the move, that held the most move, is going to be the one that you want to pick for your inversion wicks. So, this one can be used on the opposite side to then hold you up. And
Speaker A
of the move. And this is where you could get some really tight entries where now you could be entering, for example, on the half of this wick with a stop-loss right underneath the wick. Right underneath the wick because you want
Speaker A
remember, every single wick has three levels inside of it. So, we have one, two, and three levels inside of it.
Speaker A
defined ranges, very high timeframe wicks are a huge help when it comes to projected defined ranges and high time frame level marking. The way that we use these wicks on a low time frame on a one minute chart is a little bit different
Speaker A
Whereas, we wouldn't use this wick here because this only held the move one time versus this one right here, which held the move one, two, three times before it broke out. So, this lower one would be the correct wick in terms of turning
Speaker A
time frame level marking, which we're going to learn all about that. But this is how I use Wix in general. Um, hopefully you got something out of this.
Speaker A
inversion. With that being said, up here at the top of the move, this is something different. So, if you just wanted a short wick, you would go for the big wick right here. Okay? And this goes for a long as well. If you just want to take
Topics:technical analysiswickscandlesticksfair value gapsprice actionbreakout wicksinversion wickstrade entriesstop-lossmarket analysis
