Introduction to Supply and Demand Trading/ Advanced Support& Resistance Masterclass

Table of Contents:

1. Introduction

2. How supply and demand determine the price of

support and resistance

3. Support & Resistance Zones

Support Zone

Resistance Zone

Why are support and resistance zones so

relevant?

4. Types of support and resistance zones

Type 1: Continuation Zones

Type 2: Reversal Zones

5. Trading support & resistance zones with the

Market structure confluence

Example 1: Continuation zones with MS

Example 2: Reversals with MS

6. Conclusion

1. Introduction:

Welcome to the next lesson of trading mentorship.

After reading this tutorial, you will be able to master:

➢ How is price determined using supply and demand in the

market?

➢ How are support and resistance formed in real life, and what is their

importance?

➢ Understand the two types of S/R zones,

demonstrated with drawings and actual market charts.

➢ Implement these basics in real charts and trade setups.

This is the beginning of real trading setups, which can easily be your go-to and only strategy.

I encourage you to take your time to study the document at hand,

And in case of any confusion, remember to post your questions in the comments section.

2. How supply and demand

determines the price of support

and resistance:

The whole market runs like a continuous auction throughout the day,

with buyers and sellers continuously competing with each other to

get the best possible price. Buyers are the bidding cohort that brings

upward pressure on price.

Certain price zones spark buyers’ interest, and that’s where their bids

are placed. Upon reaching that zone, if the price has a bullish reaction,

more market buying takes place. That’s how support is formed.

Sellers, on the other hand, apply downward pressure on price. If more

people are willing to sell an asset rather than buy it, then there is an

abundance of that asset, and that’s how resistance is formed.

The levels where the price might find support or resistance can be

psychological and sometimes even random, but in general these

Zones are formed because large positions are willing to defend these

price levels; a buyer buys to sell at a specific price and vice versa.

For all executed trades, the number of buyers and sellers have to be

the same to form a contract because each contract needs a buyer

and a seller.

What makes the difference is the aggression, which both parties are exhibiting

willing to participate.

In economics, supply and demand levels can be demonstrated on a

graph as curves. Let's start with the demand graph.

Figure 1. Demand graph

In the Figure 1, we see that when the price is at its highest (P2), the

amount of quantity demanded in the market is at its lowest (Q1).

And as the price falls (P1), the amount of demand increases (Q2).

This indicates that the cheaper the price is, the higher the demand is

(buyers).

Figure 2. Supply graph

In Figure 2, when the price is at its lowest (P1), the amount of

quantity that is supplied to the market is at its lowest (Q1), but as the

price rises (P2), the supply increases as well (Q2).

This indicates that the higher the price is, the higher the supply is

(sellers).

But since the market is not only made out of buyers or sellers, we get

what is called the market price when we put both sides of the market

on same graph at the same time (see figure 3).

Figure 3. Equilibrium or market price

The intersection of these curves marks the equilibrium or market

price, at which demand equals supply and represents the process of

price discovery in the marketplace.

3. Support & Resistance Zones:

Support & Resistance zones are the two factors that lead to the price

action we observe in our charts. In this section, we will get to define

these zones and know why they are so relevant in trading.

Support Zone:

A support zone is where the price breaks out of a range to the upside, 

creating a base for the price to return to. Please note that this is the
view of the support zone when looking for these zones on a lower
timeframe.

Figure 4. Support Zone illustration

There's no specific way to draw the zone in practice. I prefer to take the range of extremities. You can take the lowest and highest wicks or the lowest and highest candle closes; try to backtest and find what works best for you. The goal is to identify where the interest lies for people to place orders.

Figure 5. BTC 4H chart support zone

Resistance Zone:

A resistance zone is where the price breaks out of a range to the downside, creating a base for the price to return to.

Figure 6. Resistance zone illustration

Figure 7. BTC 1H chart resistance zone

Why are support and resistance zones

So relevant?

Every time an order of significant size is placed, a huge imbalance occurs in these zones. We will discuss this further when we cover

order flow. These breakouts from the range are the footprint of large players entering or exiting the market because a huge order size is

required to make that happen. Thus, using these levels will give retail traders the advantage of getting into positions with the same

directional bias as large financial institutions.

Another nice benefit to support and resistance zone trading is that it offers the ability to ladder orders inside the zones, which is better than

identifying pinpoint horizontal levels and being front-run. Since price levels are predetermined, traders can set them and wait. This is great for traders who do not want to sit and monitor every single move on the screen.

Types of support and resistance zones

There are two types of zones. These zones are classified based on where they form in the market.

Type 1: Continuation Zones

If the price continues in the same trend direction after forming a short-term range with a small gap between range extremities, then we call it either support continuation or resistance continuation.

Figure 8. Support continuation

illustration

Figure 9. Support continuation (BTC 1H chart)

Support continuation is when the price is in an uptrend before the zone was created, then breaks out of the range and continues to the upside. (see Figure 9)

Figure 10. Resistance continuation illustration

Figure 11. Resistance continuation (1H BTC chart)

Resistance continuation is the exact opposite of support continuation. In figure 11, the price is in a downtrend before the zone was created, breaks out of the range and continues to the downside.

If the market returns to this resistance zone, a move to the downside is expected (not guaranteed).

This would basically look like a support/resistance flip on higher time frames. You need to understand that here, it does not matter what concepts you’re using; trading is a game where your primary job is to identify which price levels or zones would spark enough interest to find buyers or sellers.(Fig. 12, 13)

Figure 12. Zoomed in look

Figure 13. Zoomed-out (higher time frame) view of the same chart

Type 2: Reversal Zones:

If the price changes trend direction after a short-term range, then we call it a reversal zone.

Figure 14. Illustration of bullish reversal zone

Figure 15. Reversal zone on 1h BTC chart

In Figure 15, the price was in a downtrend, and once it hit the highlighted range, the trend direction changed from bearish to bullish. If we get another entry in this zone, we take it. If the price never returns to our reversal zone, we never jump into the trade with market orders. We simply move on to the next trade; patience is vital.

Figure 16. Illustration of bearish reversal zone

Figure 17. Bearish reversal zone on BTC 1H chart

In Figure 17, the price was in an uptrend, and once it hit the highlighted range, the trend direction changed from bullish to bearish. We see the price struggling to break above this area, resulting in a breakout to the downside. This zone forms when an uptrending market moves lower after a short-term range.

 Trading support & resistance zones with the market structure confluence:

We already know that we should be looking for support zones to buy and resistance zones to sell. Charts are full of support and resistance zones, but not all are worth trading. So, how do you determine which ones can provide you with actionable entries? Now that we understand the concepts, it is essential to identify which zones are the best to trade off because one can force hundreds of these zones on the chart across multiple timeframes.

For this matter, I suggest two trading methods in confluence with the market structure. There are other ways to add confluence, but we will use the tools covered in the mentorship so far.

• The first method is where we will be using support and resistance zones, causing a break of structure (BOS).

• And the second method is for more aggressive traders, where we’ll look for areas of support and resistance reversals causing a change of character (CHoCH) in the substructure.

For beginners, it is better to stick with the first method, where you wait for a BOS confirmation before you jump into trades.

Example 1: Continuation zones with MS:

Figure 18. trade setup using MS + continuation zones

Figure 18 is a 4H BTC chart. The first break of structure indicates a trend change to the upside; again we never enter right after a BOS occurs; we wait for a pullback. This time, we draw our support zones based on the last bearish candles before the BOS has occurred, and we see which one of the previous support zones will hold. In the example above, support zones are used in conjunction with

bullish CHoCHs to anticipate the end of a pullback and to indicate which one of the support zones will be holding the price from breaking to the downside.

Our resistance zones are drawn based on every deep swing high the price makes. Every time these zones fail to drive the price lower than the last low, it indicates a zone failure.

Remember to focus on support/resistance zones that lead to the BOS. These areas are highly likely to hold next time the price comes back to them.

Example 2: R eversals with MS:

Figure 19. trade setup using MS + reversal zones

 In Figure 19, and before we get our first sign of reversal, which is a bearish CHoCH, we see the price showing a lot of weakness while attempting to break the last high. After the first bearish BOS, a trend change is now confirmed. Every lower high price makes, is a resistance zone in formation. We draw our zones based on the last buy candle that led to the bearish BOS.

Conclusion:

I hope this tutorial has helped you understand support and resistance concepts on a deeper level. You must understand that all trading concepts require you to identify areas

where buyers and sellers would be interested in.

I recommend that you keep track of every lesson shared throughout this mentorship, since all lessons are related. The whole purpose of these lessons is to add more confluence to your trading system, but remember that if you don’t make an effort to study this material and put in the screen time, no one else will do it for you.

I hope you take this mentorship seriously. if you like and learn something valuable, don't forget to share.

Mastering Risk Management: A Trader's Gauide to Long Term Success/ A beginner to Advanced level Trading cource Part#3

                                                                                 

                                                                        

 Risk Management                                                                                   

Risk in trading refers to the possibility of incurring financial losses due to

adverse market movements or unforeseen events. Financial markets are

influenced by a lot of factors, such as economic indicators, geopolitical

events, and market segments, which can lead to price fluctuations. These

fluctuations can result in significant gains or losses for traders. 90% of the

traders lose money due to a lack of risk management. Everything that we will

discuss in this tutorial will aim at possibly making you part of the remaining 10%

who doesn’t lose all their money?

 Invalidation:

As a trader, the market is the first and foremost authority that will rate your

performance.

Let’s discuss the most important piece of information in trading - to know

when you’re wrong or your trade invalidation point.

For example, concerning the image above, a good analogy for
invalidation would be a passenger on a bus. He wants to get some ice
cream, the bus goes through multiple paths and the path it will use
today is not clear. There is one stop with ice cream on each route as
discussed above. The moment he reaches the stop with ice cream, he
has to get off, regardless of which route it was, he can’t stay on the bus
and hope that the next day the bus will take him to the other shop.
Similarly, as a trader, you are supposed to exit the trade at either target
or your stop, regardless of where the trade goes first, it needs to get
closed. Invalidation is a critical concept in trading that helps traders
manage their risk and make more informed decisions. Think of it as a
safety net or an emergency exit in a building. If things don't go as
planned, you know where to exit to minimize damage. In trading terms, if
your trading idea or hypothesis doesn't work out as expected, the
invalidation point is where you acknowledge this and exit the trade to
minimize losses.

Now, why is invalidation important?

1. Risk Management: Invalidation is a cornerstone of effective risk
management. By defining an invalidation point, you're essentially
setting a stop-loss level for your trade. If the market hits this level, it
means your initial analysis was incorrect, and it's time to exit the trade
to prevent further losses.

2. Emotional Control: Trading can be an emotional rollercoaster. By
setting an invalidation point, you're making a premeditated decision

about when to exit a trade. This can help reduce the influence of

emotions like fear and greed on your trading decisions.

3. Account Preservation: Regularly hitting your invalidation point without

managing your risk can lead to significant losses over time. By

respecting your invalidation point and exiting trades when necessary,

you can preserve your trading account balance and live to trade

another day.

Now, let's look at the different types of invalidation:

1. When

2. Where

3. How

Invalidation can sometimes be simple, for example, if the BTC price reaches

$20,000 before reaching $30,000 then our long trade idea is wrong. Often, it

might not be so simple, but HOW and WHEN the price reaches that $20,000 mark

also plays a part as your trading plans get more and more sophisticated.

CryptoCred has covered these concepts excellently and quickly in

his tutorial series. The above classification is elaborated below with some

examples:

1. Where: There is when a specific price level that you expected to act as

support or resistance doesn't hold. For example, if you thought $50

would act as support for a stock, but if the price falls to $49, your idea has

been invalidated.

Example: If the price goes below the blue level, then my long trade idea is no

longer valid.

2. When: Here, the invalidation is tied to a specific timeframe. For instance,

if you expected a coin to pump after an airdrop announcement or the

entire market to pump after a bullish CPI but it doesn't, your idea is

invalidated.

3. Combination of Where and When: This is when you expect the price to

reach a certain price point within a specific time frame after an event

(like a news release), but the price doesn't move as expected.

Or the reason can be technical, like if we have a 4-hour candle close

above $100 today, then that is a breakout from that level and we go

long.

Example:

4. When and How: This occurs when the price movement is less than

expected within a certain time frame after an event. For example, if you

expected a 5% price move after a range low sweep but price moves

only 2 percent and shows weakness, your idea is invalidated.

Or you expected a 10% price swing after Elon Musk's tweet but the price only

moves 2% then you know that effect was not as expected and your idea

is invalidated.

NOTE: Trade ideas can get invalidated even when you are in profit.

Invalidation of trade especially when factoring in the How and When factors

does not always mean your trade has to be in a loss, the idea can be proved

wrong even in profit so the best path forward in such a scenario is to close the

trade in profit and move on to the next one.

Remember, these are just examples. The actual invalidation point will depend

on your trading strategy, risk tolerance, and specific market conditions.

A common question amongst new traders is whether they should have a

fixed stop loss percentage, for example: 5 percent.

Stop loss should be based on TA alone. Every setup is different and fixed

percentage stop loss will not work.

Now, let's anticipate some potential questions you might have:

Q: How do I set an invalidation point?

A: This will depend on your trading strategy and the technical analysis tools

you're using. Some traders might use support and resistance levels, others

might use technical indicators like moving averages or Fibonacci

retracements. The key is to have a clear rationale for your invalidation point

and to stick to it once the trade is live.

Q: What if my trade hits the invalidation point but then reverses in my

favor?

A: This can happen, and it's one of the challenging aspects of trading.

However, it's important to stick to your plan. If you start ignoring your

invalidation points, you can end up holding onto losing trades for too long,

which can lead to significant losses.

Q: Can I adjust my invalidation point after the trade is live?

A: Generally, it's best to stick to your original plan. However, there may be

situations where it makes sense to adjust your invalidation point. For example,

if there's a major news event that changes the market conditions, you might

decide to adjust your invalidation point. But be careful not to adjust your

invalidation point just to avoid exiting a losing trade.

I hope this gives you a clearer understanding of invalidation in trading. It's a

crucial concept that can help you manage your risk and make more

informed trading decisions. Remember, the goal isn't to avoid losses entirely

(which is impossible), but to manage your losses effectively so that you can

stay in the game over the long term.

 The Importance of Risk Management

Risk management is essential for every trading strategy or approach, as a

trader cannot achieve profitability if they suffer significant losses from a few

unfavorable trades. Safeguarding your capital is crucial, as it guarantees

your survival and enables you to recover from challenging periods, whether

they last for a week, a month, or even a year. Now, let's address the first

question: What should be the size of your trading account? Without a doubt, it

is important not to invest all of your money into your trading account. Instead,

it should be substantial enough that losing the entire account would have a

significant impact, yet not so substantial that it would lead to financial ruin.

The table below shows how much profit is needed to recover your losses

during a drawdown. Therefore, it’s important to cut your losses. For example, if

you lose 80% of your capital, you need to make 400% just to break even.

Risk Management

Trading Trident

Before entering a trade, you need to determine your “Trading Trident”, which

is a combination of 3 things:

1. Entry Triggers as per your trading technique

2. Established invalidation levels (Stop loss)

3. Defined reversals (Profit-taking)

Entry Triggers: Entry triggers are your reasons for entering a trade.

Typically, a combination of reasons, also known as confluence,

increases the likelihood of a trade's success and provides a

comparatively more secure point of entry. In the example below, our

entry trigger was the retest of a resistance level that has turned into

support.

Stop Loss: The price in the opposite direction of the trade where the

trade is exited, at a loss. At this level, the reason for the entry becomes

invalidated according to TA and the price can then move in the

opposite direction, probabilistically. The next example shows the

importance of a predetermined invalidation level. The entry was made

on the retest of a resistance that has turned into support, but the price

failed to hold above that level and eventually broke down.

Target: It is the possible price level that the asset might touch based on

previous trends or confluence AND where a possible reversal could

occur. Target is the next path of least resistance from where the price

might reverse.

Risk to reward: (R: R)

The combination of the three key components of the Trading Trident forms

R: R. This ratio denotes how much money you make on a successful trade vs

how much money you lose on being unsuccessful on the same trade.

RISK/REWARD RATIO =(Entry point − Stop Loss Point)

                                              (Profit Target − Entry Point)

               

Let’s take an example:

You buy an asset for $100; you have a target of $200 and a stop loss of $50.

What is your R/R for this trade?

R: R  =  (100 − 50)= 50= 1

            (200 − 100)  100  2

A risk/reward ratio of 1:2 signals that you are willing to risk $50 to make double

Here is an example of the R: R ratio on a chart:

Risk per trade

Most traders agree that it is advisable to limit the risk to 2-5% of the total

account balance per trade. My personal preference is 2-3% risk per trade as I

mostly scalp and the number of trades per month is high.

Some people stick with 1%. The following table demonstrates that even if your

win rate is 60%, there will come a point when you will face five consecutive

losing trades.

It is crucial to survive these situations with enough capital to remain

unaffected, and this is where the calculation of position size and risk per trade

becomes essential.

                               Probability of a losing streak based on your strategy win rate

Probability of a losing streak based on your strategy win rate

Now a question that you might ask yourself is how do traders with low win

rates turn out to be profitable?

Profitability relies on two main factors: R: R and win rate. The win rate is

calculated by dividing the number of winning trades by the total number of

trades and then multiply the result by 100 to get a percentage. For

example, if a trader executes 100 trades and 60 of them are profitable, the

win rate would be 60% calculated as:

Win Rate = (Number of winning trades) X 100

                     (Total number of trades)

The following table illustrates how much R: R is needed for a certain level of

win rate. For instance, if your win rate is 50%, you would break even with an R:R

ratio of 1: 1.

Now let’s say you have an R: R equal to 1: 2, but you don’t know which win rate

percentage would be needed for you to breakeven. The formula is as follows:

Breakeven Win Rate =_______1_________X 100

                                      The sum of R: R ratio

                                                         

                                                                             =   1

                                                                             2 + 1

                                                                              = 33%

Hence a win rate of 33% is needed for a breakeven at 1:2.

Note: Always find your win rate then choose trades with R: R that suit your win

rate.

 Position Sizing

Position size in trading is calculated based on several factors, including risk

tolerance, account size, and the specific trade setup. The goal is to determine

the appropriate size to trade in order to manage risk effectively.

Here's a common formula for calculating position size:

Position size = ____Capital at Risk______________________

                               Distance or Percentage to Stop Loss

Example 1: 

Let's break down the components of this formula in the next

example: You have $10k and choose to risk 3% of that amount. Your stop loss

is 5% below your entry.

Position Size = 300   

                         0.05

                            =$6000

If you wish to engage in trading with a position size of $6k, you have two

options. The first option is to long or short using the full $6k without employing

leverage.

Example 2: 

Alternatively, you could choose to utilize leverage, such as 5X

leverage, which would require a margin of $1,500. By doing so, your potential

loss would be limited to 3% instead of 60%.

Example 3: 

Another example is if you have a capital of $1k and are willing to

risk 1% per trade, which is $10. Stop loss is 5% from entry; what’s your position

size?

Answer: Position Size =  10   

                                         0.05

                                      =$200

Q: How do I determine the right position size for my trades?

Answer: The right position size can depend on several factors, including your

risk tolerance, the size of your trading account, and your trading strategy.

Some traders use a fixed percentage of their account for each trade. For

example, you might decide to risk no more than 2% of your account on any

single trade. Others might adjust their position size based on specific

trade and market conditions.

Q: Can I change my position size after a trade is live?

Answer: Yes, you can typically adjust your position size after a trade is live by

adding to or reducing your position. However, it's important to have a clear

plan for managing your trades and to stick to that plan. Frequent changes to

your position size during a trade can increase your risk and make it more

difficult to manage your trades effectively.

NOTE: I have discussed the basics of position sizing and provided examples

for the same. However, after you have gained some experience as a trader or

simply have been consistently trading for more than a year then you can

increase your position size and take more risk (greater than just 1-2%). This

can be done for high-conviction trades, or in cases where you might have

some insider information as you learn more and network more.

Leverage

Warning: Trading on high leverage is extremely risky and is not

recommended for absolute beginners before you finish this tutorial.

Having said that, leverage trading is also known as margin trading, it allows

you to trade with a larger position size than you have available. Leverage in

trading refers to the use of borrowed funds to increase the potential return of

an investment. It allows traders to open positions that are larger than the

amount of capital they have in their accounts.

Example: 

if a trader has $1,000 in their account and uses 10x leverage, they

can take a position worth $10,000. The broker lends the trader additional

$9,000 to take this larger position.

 Connection between Leverage and Position Size

Leverage and position size are closely related because leverage allows

traders to increase their position size without adding more capital to their

account. However, while leverage can amplify profits, it can also amplify

losses.

If a trader uses leverage to take a larger position and the trade goes in their

favor, they can make a significant profit. But if the trade goes against them,

they can incur a significant loss. This is why it's important for traders to use

leverage carefully and to manage their position size appropriately.

Leverage pros and cons

Example:

 If you are trading at a leverage of 3x, and if you make a loss then

your loss is going to be 3 times larger than if you would’ve traded without

leverage. The more leverage you use the closer your liquidation price will also

be to the price where you have entered the trade. Liquidation means you

have lost in some cases your entire position in the trade or in the worst-case

scenario your entire account balance. If you really insist on using leverage

then I would really recommend to never really go above 5.

Example of 1x leverage: You have $1k as position size, price increases by 1%.

This means you have made 1% of the $1k as profit which is $10. On the other

hand, if the price drops by %1, you lose $10.

Now let’s look at the 3x leverage example: This means now you have $3k

position size, $1k from your own capital and $2k borrowed from the exchange.

If the price increases by 1%, you gain 3% profit on your own capital instead of

1% which is $30. If you close your trade, the $2k will be returned to the

exchange and you keep the $30 profit. On the flip side, if the trade goes

against you, then you pay back the $2k to the exchange, and you lose $30 of

your own capital which is $1k in this case. Never enter a trade with your entire

account size and always use the correct leverage to meet the position size

relative to your own portfolio.

Example 3: Real World Example

Let's say you have a trading account with $10,000, and you follow a risk

management rule where you risk only 2% of your account on any single trade.

This means the maximum amount you're willing to lose on a trade is $200 (2%

of $10,000).

Now, suppose you want to buy a stock that's trading at $50 per share, and

you've set a stop-loss order at $45. This means you're willing to risk $5 per

share.

To calculate the number of shares to buy (your position size), you would

divide the total amount you're willing to risk by the risk per share.

In this case, that's $200 divided by $5, which equals 40 shares. So in this trade,

your position size would be 40 shares.

These examples illustrate how leverage and position size come into play

when taking a trade. By understanding these concepts and using them

wisely, you can manage your risk and potentially increase your profitability in

trading.

Mastering risk management is not just about protecting your capital—it’s about securing your long-term success in the financial markets. The difference between those who succeed and those who fail often comes down to how well they manage risk. By applying the right strategies, staying disciplined, and continuously learning, you put yourself in the best position to thrive.

Remember, trading is a journey, not a sprint. The more you educate yourself, the stronger your foundation will be. Make sure to check out our other blogs to deepen your understanding of trading basics and market dynamics. Keep learning, stay patient, and let smart risk management be your guide to success!

📖 Explore more here:https://www.wealthzon.com/2025/02/how-to-become-successful-and-profitable_16.htmlhttps://www.wealthzon.com/2025/02/how-to-become-successful-and-profitable_16.html

and details here https://www.wealthzon.com/2025/02/how-to-become-successful-and-profitable.html

How to Become a Successful and Profitable Crypto Trader? A beginner to Advanced Level Free Course.Part 2

 In Part 2 of our "How to Become a Profitable Trader" course, we'll delve into two crucial aspects: Candlestick Chart Patterns and Market Dynamics.

Candlesticks:

Candlesticks are a very basic concept that you should know. While the subject of Candlesticks is really vast, there are only a few basics you need to understand. The candlestick is used instead of a line chart because a simple line chart doesn't tell the high, low, open, and close at a given time. Additionally, candlesticks can also give you clues about the strength of a particular move when we analyze the candle structure or the pattern formed by a sequence of candlesticks.

 Here are the 4 elements of a candlestick:

The body of the candle represents where the most interest has been while the

wicks represent where the price attempted to go but failed.

Tip: There are 100s of types of Candlesticks, don’t get stuck in memorizing the

names of the Candlesticks. You need to understand the LOGIC behind their

formation and use that understanding to predict future prices.

General assumption: the longer the candle body is, the more intense the

buying or selling pressure. Conversely, short candlestick bodies indicate little

price movement and represent consolidation or uncertainty. Smaller candle

bodies mean the buyers and sellers are at an impasse with no side currently

exerting dominance over price movement.

Wicks plays a really important part in understanding the STORY behind the

candlesticks. It shows the fight between the buyers and the sellers and who

won it.

 Long upper wick Vs. Long lower wick

Candles with a long upper wick and short body below denote that even

though the bulls tried to push the price higher, the sellers took control, and

there was just too much supply at this point to push the price up. Candles

with a long lower wick (tail) indicating that the bears tried to push the price

down but the selling pressure was absorbed and the price managed to go

up.

If these candles appear on areas of support or resistance or at the top or

boom of a trend, it usually signals a reversal. Check the examples below.

● Spinning top and Doji

The spinning top has long top and bottom wicks and a narrow body. On

the other hand, a Doji is generally identified as a candle where the price

closed and opened at almost the same price.

These two types of candles are generally considered to imply indecision in

the market. If they ever appear at the top or bottom of a trend, this means the

trend might potentially reverse. The example below has both.

Bullish engulfing Vs. Bearish engulfing:

The engulfing candles are one of the most important candles to showcase a

trend or simply the strength of the move down or up. The smaller the wicks

the higher buying or selling pressure there is thought to be Check the example below from the daily

 BTC chart. You will see how all of the common candlestick types are telling a story and providing

 context about what is happening in the exchange between buyers and sellers. The context is more

 important than memorizing patterns as there are hundreds of candlestick types and thousands of

 patterns. I am not a candlestick trader, as my decisions can never be solely based on what kind of

 candle formed in the last hour or day, however, everything discussed above are a few of the most

 important points that any novice trader must know.

Conclusion:

1. Long candle body: more intense buying or selling pressure.

2. Short candle body: consolidation.

3. Long bottom wick: sellers trying to push the price down but not

succeeding.

4. Long top wick: buyers trying to push the price up but not succeeding.

Understanding market dynamics

Now that you understand what candlesticks are, you are one step closer to

taking your first actual trade. However, we must first form or reform your

perception of the market and why and how markets move. The number

of participants, whether they are buyers or sellers is not the primary driver of

price movements.

It is the level of desperation or urgency among market participants to enter

or exit positions that truly influence market behavior.

Let’s understand this concept by using the analogy of a car for sale.

Example: Imagine a scenario where there is only one seller and multiple

buyers vying for the same car. As more buyers enter the market with a

desire to own the car, the value and price of the car naturally increase due

to the increased demand. However, a crucial turning point occurs when

one of the buyers begins to question whether they are willing to pay the

inflated price for the car. This hesitation initiates a range-bound price

movement as the buyers reassess their willingness to meet the higher

price.

Now, let's consider a scenario with two sellers and no buyers who can

afford the offered price. In this case, buyers will naturally hold back, and

sellers will need to lower their prices to attract potential buyers. This

example demonstrates the constant pursuit of finding value in the market,

as both buyers and sellers adjust their positions based on their

assessment of the current situation.

It is helpful to view market movements as traders making decisions rather

than simply observing price fluctuations. The most lucrative profit

opportunities often arise when traders find themselves trapped in

unfavorable positions and attempt to bail out. Identifying these trapped

traders can provide valuable insights into potential market reversals or

major price movements.

you can read How to Become a Successful and Profitable Crypto Trader? A beginner to Advanced Level Free Course.Part 1 here https://www.wealthzon.com/2025/02/how-to-become-successful-and-profitable.html