Every single candle on your chart is telling you a story. When you combine those candles together, you get the story of price.
The foundation of my Forex trading strategy is reading and understanding the story of price.
Reading and understanding the story of price is vital in Forex. It is vital because it allows you to answer one of the most important questions in trading…
Who is in control of price?
This question has three possible answers: buyers, sellers, or neither.
Being able to accurately answer this question is vital. If you are about to enter a short trade and you ask yourself
“Who is in control of price?” and your answer is “buyers”, well perhaps selling is not a great idea.
Let’s break down the story of price.
If you look at the three highlighted candles below, it is easy to conclude that sellers are in control of price.
The candles all closed lower than they opened, they all created new lows beyond the previous candles low and they all had small upper wicks in comparison to the candle body. The small upper wicks indicate that buyers were unable to push price up by much.
But what does the highlighted candle in the next chart tell us?
It has a short upper wick, a small body, and a long lower wick. This is what I call an indecision candle.