Student’s Question: Is this a long wick that would probably signal a trend change? Within how many candles would we expect a trend change after a long wick?
Power Course Instructor’s Response: Keep in mind that long wicks (along with other candle formations) signal the possiblity that an event might occur. A long wick might indicate a change in direction whereas an all-out trend change would not be occurring until we see the pair, if it had been in a downtrend, start to make higher highs and higher lows and begin to take out previous levels of resistance. The most key factor a trader can look at to determine which way a pair is likely to move is the direction of the trend on the Daily chart. Since this EURUSD pair is still in a downtrend, we would only be looking for trades in that direction. A trader can also check a lower time frame chart...1 hour or 4 hour...to see how price action is behaving in a faster time frame.