this one candle tells you something it tells you what the next candle wants to do if we want to go higher or lower now you will learn this in five steps and by the end you will be able to predict the next candle at all times and even profit from it the concept in this video is called candle signs and in Candle signs you have two types of candles because there are generally speaking two types of price action either we get fair value gaps towards one side of the market so we simply have a trending
Market Market either higher or lower now on one time frame that might look like fair value gaps going higher in this case but if you go up in time frames now that turns into One Singular up candle now in Candle science this up candle with a big body and small wig is known as a disrespect candle this means that we can continue in the direction of the disrespect now on the other hand if the market is not trending then there's most likely a reversal going on where fair value gaps are first of all going higher
and then going lower now when Fair vals go higher first and then lower this results in a long Wick at the top when Fair Val gups first go lower and then higher this results in a long Wick at the bottom these long Wicks is then what we know as respect candles where we can continue in a direction that we are respecting now just knowing this is not enough you need to understand how and where to apply those two types of candles we're going to dive into that in Step number three the direction but first let's
quickly go over step number two the PD race at all times it is important to understand that you want to combine candle signs with PD Ray because price is always moving towards and from PD Ray so the next Target that we have in price is always going to be a PD and the way we are going to deliver there is also always going to be a pay our main focus for this video is going to be on the following PD Rays fair value gaps previous candle highs previous candle lows and swing points so swing highs
and swing lows combining these PD Rays with candle science will lead to something beautiful and that is two candle rejection now we will dive deeper into this at step number four first we need step number three the direction now in Direction our focus is simply based on answering One Singular question and that is in the next candle are we going higher or lower so is it going to be an up candle or a down candle now then the way we determine what that next candle wants to do is by first of all marking out all
the PD Rays so here we start on the monthly time frame I'm just going to Mark out all the recent PD rays that we have that fair value Gap we have this previous month's high that previous month's low right there we have this swing high as well and we have this swing low so we have determined the monthly perias now ask ourselves the question where is Price coming from well price came into this this monthly fair value Gap right there had a sting into it then tried to deliver lower towards this previous month's low after
reaching this previous month's low right there it continued higher overall disrespecting the previous bearish fair value Gap that we had right there and creating potentially a bullish fair value Gap right there so if we answer that question of where is Price coming from then where is Price going that question becomes quite clear right because if it's not respecting those bearish for GS and we are getting potentially bullish for V right there we could argue that we are aiming for this previous month high right there and this swing high as our main target so on the
monthly we had a very clear answer to the question in the next candle are we going higher or lower and the weekly and the daily we want to align those with the monthly time frame now is this always going to be the case and are we going to exactly continue higher right there no but the probabilities and trading is all about checking up probability so what is more likely to happen it's more likely that we are going to continue higher right there so there might be an 80% chance that we continue higher a 20% chance
that we continue lower but nothing in trading is 100% given nothing now this brings us one step closer to entering and profiting from it but before we go over entries we need to go over step number four narrative remember those py RS because I mentioned prices always moving towards and from PD Rays moving towards a PD is the direction moving from a PDR is the narrative so if we are going higher then where are we going higher from now if we stick to monthly weekly and daily we see on the monthly right here that we
don't have this fair value just yet because that third candle is still in the making it hasn't closed yet so there's no confirmed fair value Gap now if we go into the weekly then to then find a fair value Gap we see that we had marked out this Fair value Gap earlier on right there so this bullish value Gap is what we can continue higher from towards the targets right there this previous month's high and this swing high at the top right there now what I want you to pay attention to is what do these
fair value gaps have in common right here this fair value Gap right there and this fair value Gap they are both a part of something I call the pingpong effect and the ping-pong effect might sound very fancy but it's really not it's quite simple it's understanding that value gaps get created at previous PD Ray so what I mean by that is if we establish right here that we have a bullish Trend as in we want to continue higher then what we determined in the previous step the direction we had marked out all those PD Rays
this leaves us with premium arrays right there which are the bearish PD Rays so bearish FIA for example and we have discount rrats which are the bullish P Rays so in this case a bullish value Gap now if we want to continue higher discount arrays will hold and push price higher but in a bullish Trend and if we want to continue higher what do those premium arrays actually do those premium arrays are the reason that we even create a retracement in the market to retrace back into the discount array to then continue higher from it
so what we see right here is when we continue higher and we create an expansion right there which creates the future fair value Gap this fair value Gap gets created and the third candle stops a little bit creates a rejection from the premium rate towards the left this survive Gap but also a sweep of the previous candle High to trade back into the F Gap to then continue higher from the discount rate again now how do we then know if this bullish F Gap will actually hold and we will continue higher and this again is
where candle science comes in so candle science comes in into every single step of that process now before you start seeing it everywhere this is what we in the mmt call two candle rejection anytime we trade back into a PD it has two times it can reject hence the name two candle rejection it's either going to be the first candle or the second candle and if it's not the first or the second candle then most likely we are going to create a consolidation or we're going to see opposite prices now this again is a checklist
to understand two canand rejection first of all determine the the time frame of the PD in this case we are looking at a weekly fair value Gap right there okay you are going to be looking at a two can rejection also on the weekly time frame then once we trade back into that Weekly PD if the first candle is a rejection the second candle can follow through for example we might see right here we trade back into this weekly fair value Gap right there the first candle up until this moment of course I'm not sure
what will happen afterwards and by the time you might be seeing this video the price action might completely different as well but up until this moment we are creating this respect candle because we are respecting this weekly fair value G right there so we could expect from the next candle to continue higher right there as well targeting those premium arrays this right here is what that looks like here we have this daily F value Gap right there we sting back into it we respect it right there by wicking that fair value Gap and after the
next candle we can expect lower prices now if the first candle does not reject so we do not have a rejection then we can still sweep the previous candle low in a bullish scenario to then continue higher or previous candle high in a bearish scenario so if we take a look at this fair value Gap right here then we see that this first candle that down candle is not necessarily a huge respect candle did not continue higher immediately now this is usually the case when price doesn't have the time to continue higher in in that
candle so we trade back into this fair value Gap quite late during this candle formation that leads to quite a low close in that case so what we can then focus on because the first candle is not a rejection then the second candle can sweep the previous candle low use that as the PDR to then continue higher from it so if you're going to trade from it you're going to be paying attention to this previous candle low until we reach the next premium rays right there and then you would be trading this expansion phase candle
sitting right there I'm going to give you one more example right here it happens everywhere that F Val right there first candle somewhat of a rejection yes but the second candle sweeps the previous candle High to continue lower if the first candle is a rejection the second candle can simply follow through if the first candle is not a rejection second candle can sweep previous candle High previous candle low depending on the bullish or bearish scenario to then reject and if that doesn't happen that tells you something either opposite prices or a consolidation now the next
question is how can we then capitalize on it so how can we profit from it now you can get creative with this how you want to enter is almost up to you because the hard work is already done on the higher time frame right there the lower time frame is simply getting involved now when you understand kenle science risk management wise A Whole New World opens up to you now let's take a look at this expansion candle right there how you could could have gotten involved and your risk management from this surv Gap we might
want to continue higher the first candle is not a rejection so we understand it could be a previous candle low sweep to then continue higher so once we reach below that previous candle low right there that's when you right here can go into the lower time frame to start looking for for Val gaps to continue higher from let's say we go into the 4H hour time frame right there then on the 4H hour we can clearly see the sweep of the previous candle low right there today end the rejection which again on the weekly it's
One Singular candle here on the 4H hour it's fair value gaps we see this fair value Gap right there now we can repeat the cycle right because you see the two can rejection right here on the 4 Hour so if you want to go into the lower time frame be my guest now for this example let's say right here we enter from this 4our for Gap we had our stop loss at this level right there targeting overall a 1 to2 RR now when do we go break even at this moment in time we go break
even with one single statement when there's no reason to return and to understand that statement you have to understand what price action wants to do when price stings into a previous fair value Gap the objective of price to now and go ahead and do is to create a new fair value Gap from that previous fair value Gap so right here when we tap into this for our V right there we sting into it we have the respect candle now price is objective is that we create a new 4our F Val Gap from this previous 4-Hour
F Val Gap meaning that once we have this respect candle there's actually already no reason for price to return anymore because now it should create this expansion candle right there and then it should create the fair value Gap to then continue higher right there and that means based on candle signs there's no reason to return anymore towards that level to then potentially continue higher all right perfect than thank you
