How To Draw Bases That Have A Single Candle At The Base?
How To Draw Bases That Have A Single Candle At The Base?
When bases are made of a single candle, there are two options we can use to draw them:
- Using the closest open/close of the basing candle
- Using the upper/lower shadows (wicks) of the basing candle. Use this option when the candle is not very wide and it’s not a failed ERC candle.
Both options are valid. Price often reacts to the wicks, think of them like a magnetic field having a range of attraction or an aura.
Be flexible: Experience and screen time will tell you when you can draw one or the other, or just choose one option and always draw the single candle bases the same way. Remember that making zones wider will affect the risk reward and profit margin of any trade you plan at those areas.
Tight Candles: This rule also applies to scenarios with more than a single candle at the base, however candles bodies must be tight and upper/lower shadows should not be very big, always avoid failed ERC candles
Mimimum R&R: The minimum RR is measured from the level’s proximal line. If the level is made of a single candle at the base we are allowed to take the upper and lower wicks of the basing candle, however the 2:1 imbalance will be measured from the highest open/close at demand, and the lowest open/close at supply.
In example below the RR is measured from proximal line option #1, optionally the level can be drawn wider covering the upper wick.
Zone Drawing – Option 1 – Using the closest open/close of the basing candle
Zone Drawing – Option 2 – Using the upper/lower shadows (wicks) of the basing candle
Both options are valid. Price often reacts to the wicks, think of them like a magnetic field having a range of attraction.
For more details and examples, checkout the video:
Feel free to ask if you have any queries…