-The big shadow is a two-candlestick, reversal formation and an important catalyst for the naked trader.
-It appears on support and resistance zones, precisely where the naked trader looks for high probability trade set-ups.
-The ideal big shadow will have a wide range
-Ideally, the big shadow should have the greatest range of the previous five candlesticks
-Smaller big shadow candles may be tempting because the stop loss is closer to the entry price, but historically, the very large big shadows have a much higher success rate
-The closing price is the most important price for the big-shadow candlestick. A big shadow may completely engulf the prior candlestick. A big shadow may print on a brilliant zone. A big shadow may even be the largest candlestick, with the widest range for a particular market in a very long time. However, if the closing price is not in the correct location for the big-shadow candlestick, the trade may fail miserably.
-The ideal closing price for a bullish big shadow candlestick is the high. The big-shadow candlestick has a very good chance of success if the candlestick closes on the high. Obviously, it is rare for the closing price of a bullish big-shadow candlestick to be equal to the high. The closer the closing price is to the high for the bullish big-shadow candlestick, the better the trade signal. Bullish big shadows with closing prices near the midpoint of the candlestick are very poor trading set-ups.
- if the bullish big shadow has a closing price down near the midpoint of the candlestick, the trade set-up is probably not good enough to take.
-When choosing a big-shadow trade, look to the left of the catalyst. If you see open space to the left, then perhaps the set-up will capture a critical turning point in the market.
-However, if you look to the left and you see recent price action at the same level, perhaps the market has not reached the exhaustion stage
-It appears on support and resistance zones, precisely where the naked trader looks for high probability trade set-ups.
-The ideal big shadow will have a wide range
-Ideally, the big shadow should have the greatest range of the previous five candlesticks
-Smaller big shadow candles may be tempting because the stop loss is closer to the entry price, but historically, the very large big shadows have a much higher success rate
-The closing price is the most important price for the big-shadow candlestick. A big shadow may completely engulf the prior candlestick. A big shadow may print on a brilliant zone. A big shadow may even be the largest candlestick, with the widest range for a particular market in a very long time. However, if the closing price is not in the correct location for the big-shadow candlestick, the trade may fail miserably.
-The ideal closing price for a bullish big shadow candlestick is the high. The big-shadow candlestick has a very good chance of success if the candlestick closes on the high. Obviously, it is rare for the closing price of a bullish big-shadow candlestick to be equal to the high. The closer the closing price is to the high for the bullish big-shadow candlestick, the better the trade signal. Bullish big shadows with closing prices near the midpoint of the candlestick are very poor trading set-ups.
- if the bullish big shadow has a closing price down near the midpoint of the candlestick, the trade set-up is probably not good enough to take.
-When choosing a big-shadow trade, look to the left of the catalyst. If you see open space to the left, then perhaps the set-up will capture a critical turning point in the market.
-However, if you look to the left and you see recent price action at the same level, perhaps the market has not reached the exhaustion stage