High Wave Candlestick
What it is:
How it works/Example:
High wave candlesticks portray situations where the market is having difficulty coming to a consensus on a security's value. They are indicative of a market in which uncertainty and indecision prevail. Neither the buyers nor the sellers have a clear sense of which direction the market will head. The forces of supply and demand are equally balanced.
If a high wave candle occurs on high volume, then it indicates the market's general confusion about the direction prices are headed.
Below you'll find a historical chart of the S&P 500. Note that since early March there have been three candles that can be interpreted as spinning tops and one candle that was close to a doji. The doji had a small real body and was virtually a high wave. This collection of candles depicts a bull/bear war, with neither side being able to declare a decisive victory. The last candle, however, seems to resolve the indecision of the past several weeks.