I got a question today about a candle that formed on a trendline on EURGBP.
The question was whether it matters if the long wick is on the top of the bottom of the candle.
Here’s the chart in question…
Yes, it matters.
A long wick on a candle shows indecision by traders. It’s formed (on an up candle) when price goes all the way up to the trendline, then bounces down because enough traders think the price is too high to continue trending up any further.
But that didn’t happen here. There is no upper wick, so that second guessing didn’t happen. Most of the big players in the market are in agreement that price will continue to go up, so this is not the place for a short trade.
It’s now 8 hours after that candle closed, and price is still hovering around the same place. My prediction is that price will probably still go back down eventually, and only a little bit before shooting back up.
It’s certainly not the place for a reversal trade.