Understanding Candlestick Structure Basics

Okay, Premium members, welcome to Episode 1, Volume 1 of the Core Setting Material. This is candlestick structure, so this video we're only going to be focusing on how to identify valid highs and lows, and that's going to help you identify pullbacks. Pullbacks are going to be used in identifying structure in the next video. we're going to be talking about market structure and how to actually use these to identify that but for now first you need to learn how to actually draw out or spot a pullback or a high and a low a valid high and a low and then again next video you'll understand what I mean by how to use it for market structure but it's it's going to be trend dependent so let's go ahead and just start with some candles. I think that that's going to make this the simplest, is if we just use candles rather than trying to draw you pictures of candles with diagrams. I'm just going to make this as short as it needs to be because it really doesn't need to be that long, and it's going to be pretty simple. So in candlestick structure, First thing that you're going to need to be looking for is the difference between your bullish and your bearish candles. So on a high, if you want to identify a high, and this is going to be a shock to a lot of you because if you were in my previous mentorship, I used to use candlestick structure a little bit differently. We call that magma candlestick structure, and this is mint FX candlestick structure. MintFX, DTFX, just it's a different style than what I had done in the past, but a style of candlestick structure that's been around for a while and I've found in backtesting to be pretty reliable. So how do we identify a high? That is simple. You would first need to have identified a low, which we're going to talk about, but let's say that you already know how to identify a low. So we have a low here. After this low, right, after this low gets validated, we're going to be looking for a high. And a high candle is the first candle, the first bullish candle. So in this instance, I believe these candles are gray. The first instance of a pullback is going to be your first high. So what that means is after your low, gets confirmed which happens after the closure of this candle right here let me just make sure i'm zoomed in enough i'm going to like zoom in really close so you guys can see because i know a lot of people have asked me to do that in the past so let's say you already know how to identify a low you've identified your low this is the low now how do we identify high you're going to find the bullish candles step one these gray candles now Above this, once we close above this and validate that low, we are looking for a bullish candle to have not only its body, but its wick closed underneath by a black candle, at least over a tick, probably a couple ticks. It's going to depend on your time frame. If you're talking about the five seconds, sometimes that might be different, but in general, the best rule of thumb. that I've heard it put this way before. If you have to zoom in to see if it was a closure, then it's probably wise to disregard that closure and wait for a second confirmation. So what that would mean is if we had a candle come and close below this, like right there, and you were having to zoom in and see like, did that close below? Just forget about it and move on and wait for another candle to come along later. and actually get a solid closure below. So to identify a pullback, we're just looking to see is any or are any of these bullish candles going to get closed below. So this one does not, this one does not, this one does not, this one does not, this one does not, this one does not, okay, this one does not. We've got another bullish candle that goes higher right here. Now we're looking to see, does this one get closed below? So it does get closed below by this black candle right here. point this becomes a valid high. Now when we mark out that valid high we're not just going to pretend like this wick above it doesn't exist. We're going to go ahead and cover the wicks that occurred in between the time that the high of the bullish candle formed and the time that it was closed below. Meaning if there was another wick right here we would still go ahead and cover that wick and consider that the high up here but that doesn't change the fact that we're not looking for a closure below this candle we're looking for a closure below this candle and that's because this candle brought us up to establish this high range and then it got closed below this has to do with price fractality because in general the theory on a pullback is that what you've done here is you have a high, a low, a high. Now this is like if you were on the five second or the one second chart, a low, and then high up here. Now once you've established this range of this low to high, you may wick out above it, but you do not make a structural low that pushes us successfully up above it to continue swinging higher. So we just consider it a wick and we don't pay attention to it as far as... Looking for a closure below this bearish candle. We're looking for a closure below this bullish candle because once we close below this bullish candle, let's say this is where we finally close, right? We have identified something of a flip, which we're going to get into in market structure. And we'll recover, we'll re-go over the idea of fractality. But for now, what you need to know is just the candlestick structure. Which is that this bullish candle brought us up here. This bullish candle needs to get closed underneath on the one minute time frame. If you're trying to identify a one minute pullback, you need to have a closure below that highest bullish candle on the one minute time frame. If you're on the 15 minute time frame. Sorry, I had to switch over to NQ instead of MNQ because there's some discrepancies between the two. Sometimes MNQ doesn't give closures where NQ does or vice versa. Anyways, so we're on the 15-minute time frame now. So on the 1-minute time frame, you need a closure below on the 1 minute. On the 15-minute, you would need a closure below on the 15-minute time frame. So for instance, in this example, let's talk about when we get a 1-minute closure versus a 15-minute closure. So here, we come up this. bullish 15 minute candle brings us up into this high range okay and then this next candle which ends up being a doji anyways wicks above so when we validate this high we're going to go ahead and mark this out as the high rather than this but we're still looking for this the bottom of this candle to get closed below that's again because of the theory on fractality which is high low High, low, high, and then go close below that. And now we have a flip. So let's go to the one minute in this example. Hang on. Circle this. Why does it look like that? Sorry. Go to the one minute over here. Okay, and over here on the one minute, you'll see that at this point, the one minute closes below, but we still have three minutes. If you look down at the very bottom of the screen, you see 16, 27, and a 15 minute always ends on a 30, a 45, or a 15, or a zero. So we actually have to hold, even though we closed in the one minute here, right? We have to hold below for one, two, three more candles. And once this one finishes closing underneath this line, which it does, just by a little bit, but it does. That is when we can consider this to be a 15-minute pullback because the 15-minute candle has closed below the 15-minute bearish candle has closed below a 15-minute bullish candle that we're using as our high. So let's go over an example of when it's not so picture perfect. Just over here to the left, I can see an example of that clearly. This is going to be... helpful because a lot of you have been asking questions about how can I identify draws like this where I told everyone hey we're gonna hit 440 and then we're gonna go long or we're gonna hit 140 down here and we're gonna go long That's because I understand candlestick structure well enough to see that this is a non-structural low because there is not a valid high here because we don't close below this. So there's no high, therefore there's no low, meaning this is a non-structural low, which is simply just liquidity. Now over here, let's go over the example in detail. talk about why this is a non-structural low why this is not actually a low it's not really a low because even though we put in another slightly higher body of this bullish candle here this little one It doesn't go and close higher than the wick of this. So this bullish candle brings us up into the range of this high. We would need a closure below this. Even though we got a closure below here, that's too bad because we didn't go any higher. So with the body, if we had wicked higher, we would still need a closure below this. If our body of this candle had gone higher, then we would need a closure below this, but that's not what happened. What happened was that the body stayed below the wick of the bullish candle that brought us up after this low was confirmed. So because of that, this is not a high, and therefore this is not a low. In fact, in this entire sequence, the only time we see a high or a low, is going to be right here. That's because as we're climbing up we're looking for a high. We've already had a low from down somewhere over here. We're looking for a high. High bearish candle, no closure below it. Another higher bearish candle with no closure below it. High bearish candle, we wick above it but we don't close below it. the next higher bearish candle we don't close below the next higher bearish candle we don't close below when i say we don't close below of course we come close below here what i mean is we don't close below it before we go higher than the previous wick with a body closure of a new bearish candle i'll say that again we do close below this but we're not considering this the high because prior to closing below it we close above it with a new bullish candle and that new bullish candle becomes the candle we're looking for a closure below. We've come up and closed above this so we're no longer looking for a closure below this candle anymore. We're looking for a closure below this candle now. Once we get that closure below this candle we're going to identify which candle brought us down to our low and this one gets closed by a tick. In this instance luckily it doesn't matter. which candles we're going to be using to identify. We're going to talk about lows in just a second. I don't want to get too into this, but there's a low, there's a high here, there's a low here, but there is no high here and there is no low here. So even though it looks like and what most people that you see online are going to be drawing, so you're going to be drawing something like this and it's not going to be right and it's not going to work and you're going to lose a trade because of it, is because of a candlestick structure. So there's the candlestick structure on the 15 minute. Let's go to the two hour and talk about the same example or a different example. This one is actually unique because it takes quite a while to go close below, which will happen sometimes with these higher time frames when you develop a range. So first, I'll go ahead and mark out the low for you. The last low that we got, this is going to knock your socks off. The last low that we got on the two hour was, well, sorry structural low um it's a totally different ball game let's just look at candlestick lows so this you have our high and low so our low was actually this guy right here hello is this guy getting closed above right here and we go ahead and cover this and call that the low but we need to close above this black candle after this low we're going and i'm going to I'll explain lows in a second. We're going to go through all this, but for lows, because I know a lot of you are visual learners, you need to see it the other way around. We're going to do that. So we have a low. We're climbing. We put in this high candle right here, but we never close below it. We put in a new higher candle here, but we do not go close below it. We put in a new higher candle here, but we do not go close below it. Because we don't go close below it. On the two hour. On the 15 minute, it's non-structural. On the two hour, it's also non-structural. We'll go ahead and talk about how this wasn't a valid pullback on the 15 minute another time, or you can look and find that in my trade recap videos. Over here, though, we actually do get a high and then a low. And that's because eventually, right, we're not closing below any of these bullish candles, no bearish closures below any of these bullish candles. And then finally, This big guy comes up. Now it takes 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 candles. 13 candles all the way to this one right here before we actually validate this high. So this whole time we're just inside this range of this high or this bearish high range candle. Sorry. bullish high range candle right here bullish high range candle we come up here and eventually finally go close below after we close below it we're looking for a closure above this bearish candle once we get a closure above that bearish candle we'll go ahead and cover our wick and that is our low we come up higher and now we're looking for another high we just go ahead and get rid of these drawings you This is not a projection by the way, this was an example on a daily TDA I was talking about just earlier today. Anyways, we get a confirmation of closure here. Let's go ahead and look for our high up here. Up here, climbing, high candle, no closure below, high candle, no closure below, high candle. closure below. Now, funny enough, this high candle doesn't get wicked above, so it actually happens to be, we don't need to, we don't need to move the, you know, line up to cover a wick or anything, because the high of this candle is the high of the entire range. Once we close below it, then we can look for a low, which we actually have yet to get on the two-hour. We've yet to get a low on the two-hour. If we were to go close above this candle, we would have a low in the two hour which would open us up for the possibility for a swing down which we're going to talk about market structure in the next video so let's go over some examples of lows real quick okay examples of lows let's just go right here we can go anywhere to identify lows and highs so you've identified your high let's go ahead and see that we've got a low we've got high why is this high you already know because we closed below it So here's our high right there. This bullish candle that brought us up gets closed below. That makes it a high. So now come down and we're looking for the bearish candles to get closed above. Look for the bearish candles to get closed above. The black candle needs its body and its wick to get closed above to validate it as a low. Prior to a new black candle going lower with body closure than itself. So. we go lower we go lower we go lower and finally this candle we see price come and close above right here that is when we can validate this low let's do another example of a low there are other lows here i'm just going to cherry pick the ones that are the cleanest examples so that you guys can at least start to practice the fundamentals and then get into the more complex ones as you get the hang of it. So we've got a high up here and then down here we're looking for the bearish candles to get closed above. So actually this is a little nuanced but this low candle bearish candle does get closed above right here so let's just call this our high okay so we have our high And we're coming down. No closure above. above and then we close above right here so this candle establishes our low range this candle wicks out so we go ahead and cover it and this right here is the confirmation that this is a valid low let's go to the 15 minute talk about the same example or the same scenario talking about lows on the 15 minute let's talk about this low right here So first of all, how can this be a low? Because this is a valid high. How is this a valid high? Let's just go ahead and get rid of all this. How is this a valid high? Because we've gone and closed underneath this big bearish candle or bullish candle that brought us up here. We cover our way. And we've got a low. We've got a high. Probably got a low here and some highs and lows. I'm just going to go ahead and grab this example over here. So we've got a low. because we close above this bearish candle with the furthest extended body closure and then looks like this is a high kind of um let's not worry about this just let's just ignore this one in the middle we got our low high low high whatever right then we know we have a high here so right here is a high Even though it goes and gets wicked above, once it gets closed below, this is a high. We'll go ahead and extend this out. We've got a closure below this bullish candle with the highest body. So we're going to look for a closure below it to validate the high. We validate the high. Now we're looking for a low. We close here, we go down one more candle. Now we wick out below this two times. Just because we got below that doesn't mean that we're still not looking not still looking for closure above this candle. We're not looking for closure above this candle. and we're certainly not looking for closure above this candle. We're looking for closure above this bearish candle that brought us down the furthest extension of the black body of the candle. And we're going to go ahead and cover out our wick here and consider that below. Again, let's go over it another time. Here we have a high because this candle is closed below. Now why is this not a high? Because it didn't get closed below before we went higher with a gray body, a bullish body closure up higher. This is the high, close below it. Now we put in this lowest bearish candle and go get closed above. right on this candle and we would go ahead and extend our wick out right here and this is a high low sequence okay and let's go to the two hour just so you can be certain absolutely certain that it is the same on all time frames here's a great example right here we have this big bearish candle bring us all the way down before closing above it we end up going lower with body closure to the downside. Before closing above this, we end up going down just a tad more with body closure to the downside. Now, which candle am I looking to get closed above? Am I looking at this previously lowest bodied candle, lowest candle, right? Or am I looking for the closure above this black candle whose body went and stretched? beyond the wick of this original low range candle. I'm looking for closure below this guy or above sorry above this guy because it went lower with body closure than this initial one that we were looking for. I'm not looking for it here even though this body did go below this body it did not go out past the wick but this body did go out past the wick. So therefore we're looking for closure above this which validates the low right there. That validates the low once we close above it here. Then we have a high because we go ahead and close below here. And if you don't want to consider this closure, you don't have to. You can just wait for it to come a little bit lower if you'd like. It doesn't seem matter in this example. So I would say no harm, no foul either way. Now this gets really, really convoluted here, but we're going to be looking for the bearish candles that have the furthest extended body past the initial furthest extended body. So it's a series. So how I would mark this out, let's just go ahead for the sake of conversation and say that we are considering this closure, right? So we're considering this a high on this candle getting closed below. And then we're considering this a low on this candle getting closed above. Now we need to go close below this high range candle, which doesn't happen until this candle right here. We're ignoring the wicks that came below here. Prior to the closure, once we close and validate this high, then we can start to look for a low. The furthest body from the point of closure actually ends up being this black candle. So we need to validate a low down here. We need to go ahead and close above this black candle, not these black candles, but this one. Very complicated example right there. It's going to take some getting used to. You guys are totally welcome to be messaging in the group about that because you're definitely going to need help on it. Definitely going to need help on it. Here's another good example. Here's a high. You already know why it's a high. Go ahead and cover that wick out and now this brings us down to this potential low but we don't close above it. We don't go below it with a body. We wick below but we don't go below it with a body until this candle. Is this a low and high right here? Absolutely not. We're waiting until we go lower with body closure. Once we go lower we're going to go ahead and mark that out. Look for closure above this next candle. And we get it, so we validate a low right here. Up here, climbing. Once we close, we can start to look for a high. Is this a high? No. Is this a high? No. Is this a high? Yes. Because of this closure. And now we're going to go ahead and cover the wick. So now we have a low and a high. Now are these structurally sound swing points that I'm marking out? No. You're going to learn about the difference between protected highs and external highs and protected lows and external lows in the next video. A little bit of foreshadowing. When you're in a bullish sequence, every single high that you see is going to be considered an external high. And every time that you create a low, that then goes and runs that high, the lowest point between that external high, the lowest point between the external high, and when you go and close above the external high. is the only actual valid structural low. This is the external high, this is the low. We're going to get into that next video. If you guys have any questions about candlestick structure, please message and I'll try to clarify. I'm going to do one more example here, okay, just for good measure right here on the 15 minute. We're coming up, we have a high, we have a low, This candle is not a high because before we go close below it, we go up higher with another bullish candle with body closure above the high of this high range candle. So we disregard this candle and we look to see a closure below this candle. Once we get that closure below this candle, we validate this as a high and go ahead and cover the wick. This so happens to be a 15 minute swing high. Okay, but you won't actually use candlestick structure to identify protected highs or lows. You only are going to ever be using candlestick structure to identify external highs or lows because external highs or lows are based on candlestick structure for pullbacks, while protected highs or lows are based on going and closing below the external low or above the external high. Okay, I will see you in the next video where we discuss market structure and how to use these to start drawing swings and flips.

we're going to be talking about market structure and how to actually use these to identify that but for now first you need to learn how to actually draw out or spot a pullback or a high and a low a valid high and a low and then again next video you'll understand what I mean by how to use it for market structure but it's it's going to be trend dependent so let's go ahead and just start with some candles. I think that that's going to make this the simplest, is if we just use candles rather than trying to draw you pictures of candles with diagrams. I'm just going to make this as short as it needs to be because it really doesn't need to be that long, and it's going to be pretty simple.

So in candlestick structure, First thing that you're going to need to be looking for is the difference between your bullish and your bearish candles. So on a high, if you want to identify a high, and this is going to be a shock to a lot of you because if you were in my previous mentorship, I used to use candlestick structure a little bit differently. We call that magma candlestick structure, and this is mint FX candlestick structure. MintFX, DTFX, just it's a different style than what I had done in the past, but a style of candlestick structure that's been around for a while and I've found in backtesting to be pretty reliable. So how do we identify a high?

That is simple. You would first need to have identified a low, which we're going to talk about, but let's say that you already know how to identify a low. So we have a low here. After this low, right, after this low gets validated, we're going to be looking for a high.

And a high candle is the first candle, the first bullish candle. So in this instance, I believe these candles are gray. The first instance of a pullback is going to be your first high.

So what that means is after your low, gets confirmed which happens after the closure of this candle right here let me just make sure i'm zoomed in enough i'm going to like zoom in really close so you guys can see because i know a lot of people have asked me to do that in the past so let's say you already know how to identify a low you've identified your low this is the low now how do we identify high you're going to find the bullish candles step one these gray candles now Above this, once we close above this and validate that low, we are looking for a bullish candle to have not only its body, but its wick closed underneath by a black candle, at least over a tick, probably a couple ticks. It's going to depend on your time frame. If you're talking about the five seconds, sometimes that might be different, but in general, the best rule of thumb.

that I've heard it put this way before. If you have to zoom in to see if it was a closure, then it's probably wise to disregard that closure and wait for a second confirmation. So what that would mean is if we had a candle come and close below this, like right there, and you were having to zoom in and see like, did that close below?

Just forget about it and move on and wait for another candle to come along later. and actually get a solid closure below. So to identify a pullback, we're just looking to see is any or are any of these bullish candles going to get closed below.

So this one does not, this one does not, this one does not, this one does not, this one does not, this one does not, okay, this one does not. We've got another bullish candle that goes higher right here. Now we're looking to see, does this one get closed below? So it does get closed below by this black candle right here. point this becomes a valid high.

Now when we mark out that valid high we're not just going to pretend like this wick above it doesn't exist. We're going to go ahead and cover the wicks that occurred in between the time that the high of the bullish candle formed and the time that it was closed below. Meaning if there was another wick right here we would still go ahead and cover that wick and consider that the high up here but that doesn't change the fact that we're not looking for a closure below this candle we're looking for a closure below this candle and that's because this candle brought us up to establish this high range and then it got closed below this has to do with price fractality because in general the theory on a pullback is that what you've done here is you have a high, a low, a high. Now this is like if you were on the five second or the one second chart, a low, and then high up here.

Now once you've established this range of this low to high, you may wick out above it, but you do not make a structural low that pushes us successfully up above it to continue swinging higher. So we just consider it a wick and we don't pay attention to it as far as... Looking for a closure below this bearish candle. We're looking for a closure below this bullish candle because once we close below this bullish candle, let's say this is where we finally close, right? We have identified something of a flip, which we're going to get into in market structure.

And we'll recover, we'll re-go over the idea of fractality. But for now, what you need to know is just the candlestick structure. Which is that this bullish candle brought us up here.

This bullish candle needs to get closed underneath on the one minute time frame. If you're trying to identify a one minute pullback, you need to have a closure below that highest bullish candle on the one minute time frame. If you're on the 15 minute time frame. Sorry, I had to switch over to NQ instead of MNQ because there's some discrepancies between the two.

Sometimes MNQ doesn't give closures where NQ does or vice versa. Anyways, so we're on the 15-minute time frame now. So on the 1-minute time frame, you need a closure below on the 1 minute. On the 15-minute, you would need a closure below on the 15-minute time frame.

So for instance, in this example, let's talk about when we get a 1-minute closure versus a 15-minute closure. So here, we come up this. bullish 15 minute candle brings us up into this high range okay and then this next candle which ends up being a doji anyways wicks above so when we validate this high we're going to go ahead and mark this out as the high rather than this but we're still looking for this the bottom of this candle to get closed below that's again because of the theory on fractality which is high low High, low, high, and then go close below that. And now we have a flip. So let's go to the one minute in this example.

Hang on. Circle this. Why does it look like that? Sorry. Go to the one minute over here.

Okay, and over here on the one minute, you'll see that at this point, the one minute closes below, but we still have three minutes. If you look down at the very bottom of the screen, you see 16, 27, and a 15 minute always ends on a 30, a 45, or a 15, or a zero. So we actually have to hold, even though we closed in the one minute here, right?

We have to hold below for one, two, three more candles. And once this one finishes closing underneath this line, which it does, just by a little bit, but it does. That is when we can consider this to be a 15-minute pullback because the 15-minute candle has closed below the 15-minute bearish candle has closed below a 15-minute bullish candle that we're using as our high.

So let's go over an example of when it's not so picture perfect. Just over here to the left, I can see an example of that clearly. This is going to be...

helpful because a lot of you have been asking questions about how can I identify draws like this where I told everyone hey we're gonna hit 440 and then we're gonna go long or we're gonna hit 140 down here and we're gonna go long That's because I understand candlestick structure well enough to see that this is a non-structural low because there is not a valid high here because we don't close below this. So there's no high, therefore there's no low, meaning this is a non-structural low, which is simply just liquidity. Now over here, let's go over the example in detail.

talk about why this is a non-structural low why this is not actually a low it's not really a low because even though we put in another slightly higher body of this bullish candle here this little one It doesn't go and close higher than the wick of this. So this bullish candle brings us up into the range of this high. We would need a closure below this. Even though we got a closure below here, that's too bad because we didn't go any higher.

So with the body, if we had wicked higher, we would still need a closure below this. If our body of this candle had gone higher, then we would need a closure below this, but that's not what happened. What happened was that the body stayed below the wick of the bullish candle that brought us up after this low was confirmed. So because of that, this is not a high, and therefore this is not a low. In fact, in this entire sequence, the only time we see a high or a low, is going to be right here.

That's because as we're climbing up we're looking for a high. We've already had a low from down somewhere over here. We're looking for a high.

High bearish candle, no closure below it. Another higher bearish candle with no closure below it. High bearish candle, we wick above it but we don't close below it.

the next higher bearish candle we don't close below the next higher bearish candle we don't close below when i say we don't close below of course we come close below here what i mean is we don't close below it before we go higher than the previous wick with a body closure of a new bearish candle i'll say that again we do close below this but we're not considering this the high because prior to closing below it we close above it with a new bullish candle and that new bullish candle becomes the candle we're looking for a closure below. We've come up and closed above this so we're no longer looking for a closure below this candle anymore. We're looking for a closure below this candle now. Once we get that closure below this candle we're going to identify which candle brought us down to our low and this one gets closed by a tick.

In this instance luckily it doesn't matter. which candles we're going to be using to identify. We're going to talk about lows in just a second. I don't want to get too into this, but there's a low, there's a high here, there's a low here, but there is no high here and there is no low here.

So even though it looks like and what most people that you see online are going to be drawing, so you're going to be drawing something like this and it's not going to be right and it's not going to work and you're going to lose a trade because of it, is because of a candlestick structure. So there's the candlestick structure on the 15 minute. Let's go to the two hour and talk about the same example or a different example.

This one is actually unique because it takes quite a while to go close below, which will happen sometimes with these higher time frames when you develop a range. So first, I'll go ahead and mark out the low for you. The last low that we got, this is going to knock your socks off.

The last low that we got on the two hour was, well, sorry structural low um it's a totally different ball game let's just look at candlestick lows so this you have our high and low so our low was actually this guy right here hello is this guy getting closed above right here and we go ahead and cover this and call that the low but we need to close above this black candle after this low we're going and i'm going to I'll explain lows in a second. We're going to go through all this, but for lows, because I know a lot of you are visual learners, you need to see it the other way around. We're going to do that.

So we have a low. We're climbing. We put in this high candle right here, but we never close below it.

We put in a new higher candle here, but we do not go close below it. We put in a new higher candle here, but we do not go close below it. Because we don't go close below it.

On the two hour. On the 15 minute, it's non-structural. On the two hour, it's also non-structural. We'll go ahead and talk about how this wasn't a valid pullback on the 15 minute another time, or you can look and find that in my trade recap videos.

Over here, though, we actually do get a high and then a low. And that's because eventually, right, we're not closing below any of these bullish candles, no bearish closures below any of these bullish candles. And then finally, This big guy comes up. Now it takes 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 candles.

13 candles all the way to this one right here before we actually validate this high. So this whole time we're just inside this range of this high or this bearish high range candle. Sorry. bullish high range candle right here bullish high range candle we come up here and eventually finally go close below after we close below it we're looking for a closure above this bearish candle once we get a closure above that bearish candle we'll go ahead and cover our wick and that is our low we come up higher and now we're looking for another high we just go ahead and get rid of these drawings you This is not a projection by the way, this was an example on a daily TDA I was talking about just earlier today. Anyways, we get a confirmation of closure here.

Let's go ahead and look for our high up here. Up here, climbing, high candle, no closure below, high candle, no closure below, high candle. closure below. Now, funny enough, this high candle doesn't get wicked above, so it actually happens to be, we don't need to, we don't need to move the, you know, line up to cover a wick or anything, because the high of this candle is the high of the entire range.

Once we close below it, then we can look for a low, which we actually have yet to get on the two-hour. We've yet to get a low on the two-hour. If we were to go close above this candle, we would have a low in the two hour which would open us up for the possibility for a swing down which we're going to talk about market structure in the next video so let's go over some examples of lows real quick okay examples of lows let's just go right here we can go anywhere to identify lows and highs so you've identified your high let's go ahead and see that we've got a low we've got high why is this high you already know because we closed below it So here's our high right there. This bullish candle that brought us up gets closed below.

That makes it a high. So now come down and we're looking for the bearish candles to get closed above. Look for the bearish candles to get closed above.

The black candle needs its body and its wick to get closed above to validate it as a low. Prior to a new black candle going lower with body closure than itself. So. we go lower we go lower we go lower and finally this candle we see price come and close above right here that is when we can validate this low let's do another example of a low there are other lows here i'm just going to cherry pick the ones that are the cleanest examples so that you guys can at least start to practice the fundamentals and then get into the more complex ones as you get the hang of it. So we've got a high up here and then down here we're looking for the bearish candles to get closed above.

So actually this is a little nuanced but this low candle bearish candle does get closed above right here so let's just call this our high okay so we have our high And we're coming down. No closure above. above and then we close above right here so this candle establishes our low range this candle wicks out so we go ahead and cover it and this right here is the confirmation that this is a valid low let's go to the 15 minute talk about the same example or the same scenario talking about lows on the 15 minute let's talk about this low right here So first of all, how can this be a low? Because this is a valid high.

How is this a valid high? Let's just go ahead and get rid of all this. How is this a valid high? Because we've gone and closed underneath this big bearish candle or bullish candle that brought us up here.

We cover our way. And we've got a low. We've got a high. Probably got a low here and some highs and lows.

I'm just going to go ahead and grab this example over here. So we've got a low. because we close above this bearish candle with the furthest extended body closure and then looks like this is a high kind of um let's not worry about this just let's just ignore this one in the middle we got our low high low high whatever right then we know we have a high here so right here is a high Even though it goes and gets wicked above, once it gets closed below, this is a high. We'll go ahead and extend this out. We've got a closure below this bullish candle with the highest body.

So we're going to look for a closure below it to validate the high. We validate the high. Now we're looking for a low.

We close here, we go down one more candle. Now we wick out below this two times. Just because we got below that doesn't mean that we're still not looking not still looking for closure above this candle.

We're not looking for closure above this candle. and we're certainly not looking for closure above this candle. We're looking for closure above this bearish candle that brought us down the furthest extension of the black body of the candle.

And we're going to go ahead and cover out our wick here and consider that below. Again, let's go over it another time. Here we have a high because this candle is closed below. Now why is this not a high?

Because it didn't get closed below before we went higher with a gray body, a bullish body closure up higher. This is the high, close below it. Now we put in this lowest bearish candle and go get closed above. right on this candle and we would go ahead and extend our wick out right here and this is a high low sequence okay and let's go to the two hour just so you can be certain absolutely certain that it is the same on all time frames here's a great example right here we have this big bearish candle bring us all the way down before closing above it we end up going lower with body closure to the downside. Before closing above this, we end up going down just a tad more with body closure to the downside.

Now, which candle am I looking to get closed above? Am I looking at this previously lowest bodied candle, lowest candle, right? Or am I looking for the closure above this black candle whose body went and stretched? beyond the wick of this original low range candle.

I'm looking for closure below this guy or above sorry above this guy because it went lower with body closure than this initial one that we were looking for. I'm not looking for it here even though this body did go below this body it did not go out past the wick but this body did go out past the wick. So therefore we're looking for closure above this which validates the low right there.

That validates the low once we close above it here. Then we have a high because we go ahead and close below here. And if you don't want to consider this closure, you don't have to. You can just wait for it to come a little bit lower if you'd like. It doesn't seem matter in this example.

So I would say no harm, no foul either way. Now this gets really, really convoluted here, but we're going to be looking for the bearish candles that have the furthest extended body past the initial furthest extended body. So it's a series. So how I would mark this out, let's just go ahead for the sake of conversation and say that we are considering this closure, right? So we're considering this a high on this candle getting closed below.

And then we're considering this a low on this candle getting closed above. Now we need to go close below this high range candle, which doesn't happen until this candle right here. We're ignoring the wicks that came below here.

Prior to the closure, once we close and validate this high, then we can start to look for a low. The furthest body from the point of closure actually ends up being this black candle. So we need to validate a low down here. We need to go ahead and close above this black candle, not these black candles, but this one.

Very complicated example right there. It's going to take some getting used to. You guys are totally welcome to be messaging in the group about that because you're definitely going to need help on it. Definitely going to need help on it.

Here's another good example. Here's a high. You already know why it's a high.

Go ahead and cover that wick out and now this brings us down to this potential low but we don't close above it. We don't go below it with a body. We wick below but we don't go below it with a body until this candle. Is this a low and high right here? Absolutely not.

We're waiting until we go lower with body closure. Once we go lower we're going to go ahead and mark that out. Look for closure above this next candle. And we get it, so we validate a low right here. Up here, climbing.

Once we close, we can start to look for a high. Is this a high? No. Is this a high? No.

Is this a high? Yes. Because of this closure. And now we're going to go ahead and cover the wick.

So now we have a low and a high. Now are these structurally sound swing points that I'm marking out? No.

You're going to learn about the difference between protected highs and external highs and protected lows and external lows in the next video. A little bit of foreshadowing. When you're in a bullish sequence, every single high that you see is going to be considered an external high.

And every time that you create a low, that then goes and runs that high, the lowest point between that external high, the lowest point between the external high, and when you go and close above the external high. is the only actual valid structural low. This is the external high, this is the low.

We're going to get into that next video. If you guys have any questions about candlestick structure, please message and I'll try to clarify. I'm going to do one more example here, okay, just for good measure right here on the 15 minute. We're coming up, we have a high, we have a low, This candle is not a high because before we go close below it, we go up higher with another bullish candle with body closure above the high of this high range candle. So we disregard this candle and we look to see a closure below this candle.

Once we get that closure below this candle, we validate this as a high and go ahead and cover the wick. This so happens to be a 15 minute swing high. Okay, but you won't actually use candlestick structure to identify protected highs or lows. You only are going to ever be using candlestick structure to identify external highs or lows because external highs or lows are based on candlestick structure for pullbacks, while protected highs or lows are based on going and closing below the external low or above the external high. Okay, I will see you in the next video where we discuss market structure and how to use these to start drawing swings and flips.

Transcript for:Understanding Candlestick Structure Basics

Transcript for:
Understanding Candlestick Structure Basics