All language subtitles for 4. Candlestick body or ends

Many traders find themselves wondering
whether it is better to work with the

ends of the body or with the ends of the
candlestick when drawing lines to

analyze potential reversal zones.

Traders who anchor their lines on the
end of the body and up to the end of the

wick create areas of imbalance between
supply and demand and hope that a new

reversal will occur in these areas in
the future, possibly providing a trading

opportunity.

Other traders, including myself, prefer
to identify the area from the end of the

wick. As we can see on the chart, most
of the time the price goes right through

the zone that the first type of crater
establishes, from the closing price to

the extreme, in a pattern of false
breakouts from previous highs and lows.

On rare occasions, the market will
generate a powerful reversal without a

breakout.

The reason is related to the creation of
pivots and the location of limit orders

pending execution.

A pivot is simply a price formation that
creates a turning point or pivot in the

market. The pivot is created with at
least two candlesticks to the left and

the right of the one that reaches the
pivot point. The power of pivots lies in

the use they have for the participants,
since, in general, these points are

where we usually place our orders and
enter and exit the market.

A large number of these orders tend to
be located in the vast majority of

pivots. And the greater the strength of
the pivot, the more candlesticks there

are to the left and to the right, the
greater the liquidity located at the

point. This is why the greater the
number of candlesticks used to create

pivot, the greater its strength, because
there will be more liquidity at this

point. And therefore, the trend movement
that originates later will probably

have greater strength.

In my view, for this reason, it is more
interesting to wait for the price to

break through that zone rather than
simply test it.

A breakout in these zones is the key
behavior we should wait for before

considering entering the market.

Basically, because of the implications
it has, if, after visiting said zone,

price turns and reacts denoting
aggressiveness, it is likely that large

have taken advantage of this movement to
assume the liquidity they need to build

their position, leaving the path of
least resistance quite clear.