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Gauging momentum | Candlestick close position

This is the second of a four lesson course

Where the candle closes in relation to the range tells us the sentiment between buyers and sellers. This is the most important thing to know when reading price action.

The position of the close is the first message describing its sentiment.

Every candlestick close position can provide us with a fast but only initial assessment of the sentiment, so depending on the position of the close in the candlestick range the initial access can be bullish, neutral or bearish.

  • High close can be viewed as a bullish sentiment, for the period of that candle and is one in which the closing price is within the upper third of the candle range.
  • Mid close can be viewed as a neutral sentiment, for the period of that candle and is one in which the closing price is within the middle third of the candle range.
  • Low close can be viewed as a bearish sentiment, for the period of that candle and is one in which the closing price is within the lower third of the candle range.

Examples of high, mid and low close candles are demonstrated in the diagram below however we may see the different degrees of bullishness, neutrality and bearishness though within each candle from (a) to (f).