White Candle

What is a White Candle in Trading?

In trading, a White Candle is a vital visual tool found prevalently in candlestick charts. Its color, being white or even sometimes green, indicates a single period where the closing price of a security is higher than the opening price. This tells traders that buying pressure dominated during the time interval it represents.

Structure of a White Candle

Understanding the basic structure of a White Candle can simplify trading for beginners. It is designed with three major parts: the wick, body, and tail. The body represents the price range between the opening and closing prices, while the wick and tail, also known as shadows, represent the highest and lowest prices during that period respectively.

Significance of a White Candle in Trading

A White Candle can provide critical information about market sentiment. If it appears at the end of a series of red or black candles (denoting a falling price), it implies that the trend may be reversing, indicating a bullish market. It’s important to watch for these signals, as they give a hint at where market prices might be heading next.

Strategies using White Candles

Traders use the White Candle when formulating strategies. Observing the patterns that white candles form, such as the White Soldiers pattern, can help predict future price movements. However, it’s important to be cautious because, despite patterns implying a certain outcome, the market can always behave unpredictably.