In trading, some candles whisper while others shout. And when a wide range candle appears, it’s screaming at you. But the real question is—what is it saying? 
A wide range candle is a powerful market signal, a declaration of strength that either shouts “bullish momentum” or “bearish dominance.” But before you assume it’s a golden opportunity, let’s break it down. How do you interpret these candles correctly? More importantly, how do you avoid falling into traps? Let’s dive in.
Types of Wide Range Candles
There are two main types:
- Wide range Bullish Candlestick
- Wide range Bearish Candlestick
Today, let’s focus on the bullish side of things.
What Are Wide Range Bullish Candlesticks?
A wide range bullish candlestick is a large-bodied candle that stands out from the rest. It covers a significantly larger range compared to recent bars, often signaling strong buying pressure. While there’s no strict size definition, with experience, you’ll spot them easily on a chart.
“Let’s look at the chart. It has two bullish candlesticks. The first one has a strong upside follow-through, indicating bullish pressure. But the second one, despite being bullish, has a bearish follow-through. What does that mean?”
The first bullish candle suggests that buyers are in control, pushing the price higher with momentum. The strong follow-through confirms this strength.
“But why does the second bullish candle lose that momentum?”
That’s because, even though the second bullish candle closes higher, it faces immediate selling pressure afterward. Instead of continuing upward, the next candle moves lower, showing that sellers are stepping in. This shift in follow-through suggests that buyers might be losing control, and bearish pressure is increasing.
“So, a bullish candle alone isn’t enough?”
Exactly! Where it appears in the trend is just as important. If a bullish candle is followed by bearish pressure instead of continuation, it could indicate buyer exhaustion or even a potential reversal.
That’s why a wide range candle should never be analyzed in isolation.
What Does a Wide Range Bullish Candlestick Really Indicate?
A big bullish candle means strong buying—at least, that’s what it seems. But is it real strength, or just an illusion? Let’s break it down using Wyckoff’s Laws & Volume Price Analysis.
The Law of Supply and Demand
- High Volume: If a wide range bullish candle forms with high volume, demand is clearly greater than supply. Institutions might be accumulating.
- Low Volume: If the same candle appears with low volume, it could be a trap—price is rising, but without real strength.
The Law of Cause and Effect
- If a strong bullish candle follows a period of accumulation (sideways movement with increasing volume), it’s a sign of a valid breakout.
- If a wide range candle appears randomly in an uptrend without prior accumulation, it may be unsustainable.
The Law of Effort vs. Result
- If price makes a strong move but volume is low, the effort (volume) doesn’t match the result (price move). Be cautious.
- If volume is high but the result is weak (small candle or rejection), sellers might be absorbing buying pressure.
“Let’s look at the chart. I’ve marked five bullish candlesticks, and we’ll analyze them one by one.”
Candle-1: The prevailing trend is a downtrend, and the price approaches support. A wide-range bullish candlestick forms with high volume and a tail below support. This suggests that smart money is trying to push the price below support to generate liquidity and fill their long positions. What happens next? The price starts an uptrend.
Candle-2: A wide-range bullish candlestick with high volume forms, confirming the continuation of the uptrend.
Candle-3: Another wide-range bullish candlestick appears, but this time with ultra-high volume, approaching resistance. This signals FOMO (fear of missing out) among retail traders.
Candle-4: A wide-range bullish candlestick with high volume breaks through resistance. At first glance, it seems like a genuine breakout, aligning with Wyckoff’s Effort vs. Result principle. But before assuming a breakout, we must observe the next candle.
Candle-5: A narrow-range bullish candlestick with high volume forms right after the breakout. This violates Wyckoff’s Effort vs. Result principle, indicating the presence of smart money. They triggered the breakout to create liquidity, offloading long positions to retailers while opening new short positions. What follows? The price reverses below resistance and enters a strong downtrend.
“So, a bullish candle alone isn’t enough?”
Exactly! The context—where it appears in the trend—is crucial. But even more important is understanding who is behind the move. If a bullish candle is followed by bearish pressure instead of continuation, it could signal buyer exhaustion or even a potential reversal.
How to Confirm Bullish Strength
So, how do you confirm if a wide range bullish candle is legit?
- Look at Volume – Is it above average? If yes, the move has real strength.
- Check Previous Structure – Did it break a key level? Was there accumulation before?
- Observe the Next Candle – If the next candle confirms buying (higher close, strong follow-through), the move is likely real.
- Watch Context – Is it appearing at the start of trend or end of the trend? If, it is appearing at the start of the trend reveals the bullish pressure or at the end of the trend bearish pressure likely.
But what if volume doesn’t match the move?
When Wide Range Bullish Candlestick Become Traps
A big candle with low volume or ultra-high volume? That’s a warning sign—but context is key. Where a wide range candle appears determines whether it’s a genuine move or a trap set for retail traders before a reversal.
Classic Trap Scenarios
Buying Climax (BC):
- A wide range bullish candle with ultra-high volume after a prolonged uptrend can signal the end of the move.
- Institutions might be distributing their positions to unsuspecting retail traders or preparing to go short.
Testing Demand:
- A wide range bullish candle with low volume after an extended uptrend could be a final test to gauge remaining buying interest.
- If demand is weak, smart money may use this opportunity to push prices downward.
How Should You React?
Scenario 1: You’re Already in a Trade and See a Wide Range Candle with Weak Volume
- Consider taking profits or tightening your stop-loss—this move may not hold.
- Observe the next few candles: Are they confirming strength, or is selling pressure increasing?
Scenario 2: You’re Not in a Trade but See a Wide Range Candle
- Don’t rush in! Let the market confirm the move.
- Check volume: Is it supporting the breakout?
- Identify key levels: Did this candle break through a significant resistance/support zone?
Final Thoughts
The market always leaves clues. A wide range candle alone isn’t enough volume must confirm price action. Without it, what looks like a strong move could be a well-crafted illusion.
By applying Volume Price Analysis and truly understanding the market’s hidden motives, you can avoid traps and position yourself on the right side of the trade.
So, the next time you see a big candle, don’t just ask, “Is this a bullish signal?” Instead, ask: “Who is behind this move?”
Institutions? Or just a temporary illusion?
Master this, and you’ll decode the market’s loudest signals with confidence.
Note: This article is part of Tradonomics’ Smart Money Secrets with Volume Price Analysis series. Explore it to unlock powerful trading insights and master Volume Price Action!