All this time you’ve been hearing of top and bottom wicks. Waiting for a steep wick waiting for a small wick. Do you wonder why?

Well it's because of something known as liquidity grabs. Liquidity grabs in the Forex market are when price taps back into a support/resistance zone contrary to the overall trend. Price will then reverse to continue with the trend. So if we are in a bullish trend you can see a push to the down side before moving up. This push to the downside can break previous candle bottoms (especially the lower time frames 1m,5m,15m,30m) but tends to respect higher time frame zones. 

Liquidity grabs on smaller time frames can be seen as onions or retests of zones. Liquidity grabs can best be seen with specific types of candle patterns.

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Candles Structure

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The Engulfing bar is a candlestick pattern that gets its name because it completely "engulfs" the previous candle(s). It can even engulf multiple candles, but at least one candle must be fully covered to be considered an engulfing bar. You can call this a strong close as well. The reason this is called a strong close, is due to the candle showing us that one side of the market (buyers/sellers) is significantly stronger than the other - which is why this candle has the ability to engulf previous candles.

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The bearish engulfing pattern is particularly significant in candlestick analysis. It consists of two candle bodies: the first body is smaller than the second one, meaning the second body completely covers or engulfs the previous one. 

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Again always note that you must consider the trend bias for every trade. So if this occurs on an uptrend you may just expect a pullback but typically it will still respect the trend.

Doji Candles

Doji candles could indicate that the volume is dying down, (small candle body, large body’s mean large volume) or it is at an indecision level .This is especially true as the scale of the time frame increases.

If the Doji closes perfectly in the middle, we just block out the candle. Doji candles that wick down to break lows, then come back up to close within support ranges, we can see as early signs of support being formed.

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In an uptrend, a Doji with the closing near the top with a steep bottom wick can indicate there could be a continued push on the break of its highs. This is due to price forming a steep liquidity grab (especially if the Doji is on a smaller time frame trend since we know those zones can be disrespected. You will learn about liquidity soon and it all will make perfect sense on how price action moves in flow with one another). Vice versa on bear trends.

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Other than watching candles close and analyzing liquidity grabs, ControllerFX takes it one step deeper. You can look for liquidity grabs during live candles forming to get more precise trades. For example, if you get a bullish breakout on the 30m candle, you can anticipate a liquidity grab to a smaller zone of support down towards the range we just broke out of (5m,15m). This will form without breaking the current 30m lows, we would then enter on the candle flipping back bullish.

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If you really think about it, liquidity grabs can also be seen as smaller onion trades in play. The minute charts or the second charts are going back to retest something before they head up! Remember the market is infinitely fractal even beyond the 1m, there are seconds charts at play. Time is live!

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