Forex Trading: Exhaustion Wicks vs. Wick Fills

Presenter: Raja Banks

Overview

• Discussing the difference between exhaustion wicks and wick fills.
• Importance of understanding these concepts for forex trading.

Wick Fill

• Definition: Direction where the market is heading.
  • Market structure suggests that the wick will get filled, whether price is moving bullish or bearish.

Anatomy of a Wick Fill

• Example: During an uptrend with a bullish candle closing, there's a high probability the next candle will continue bullish and fill the wick.
• Four-Hour Candle Breakdown: Visual example with four one-hour candles.
  • Initial bearish candle makes a lower wick.
  • Subsequent bullish candles form the bulk of the four-hour candle.

Key Points About Wick Fills

• Candle Anatomy: Most candles form with a lower and bottom wick.
• Executing Wick Fills: Identify support, then higher probability for price continuation in the trend direction (uptrend or downtrend).
• Volume and Timing:
  • Pre-London, London open, Pre-New York, New York open, NYC, and London close.
• Body vs. Wick: Wick fills are more likely when the body of the candle is bigger than the wick.

Exhaustion Wicks

• Definition: When a candle’s wick is bigger than its body, indicating market exhaustion.
  • Example: Bullish candle with a large wick and small body suggests a rejection and a potential trend reversal.

Identifying Exhaustion Wicks

• Volume Decrease: Small body indicates decreasing volume.
• Impulse Entries: Ideal after an exhaustion candle when the next candle breaks the low (bearish scenario).

Practical Tips for Trading Exhaustion Wicks

• Uptrend Scenario: Wait for retracement and support formation before continuing in the uptrend.
• Downtrend Scenario: Wait for a resistance to form after a retracement, then continue the downtrend.
• Time Frames:
  • 30-minute, 1-hour, 4-hour for stronger confirmations.
  • Avoid 5-minute and 15-minute time frames for exhaustion confirmation.

Conclusion

• Review and Practice: Study charts from the past week to identify exhaustion candles and wick fills during high volume times.
• Additional Resources: Refer to related videos on reading market structure and wick fills.

Note: Understanding these concepts and practicing them on historical charts can significantly improve trading precision and confidence.