Confirmation candles are crucial to validate a breakout and ensure you enter the market at the right time.
After identifying a reversal pattern near a liquidity zone, wait for a confirmation candle to close before entering the trade.
A confirmation candle is typically a strong, decisive candle that breaks above resistance (for longs) or below support (for shorts).
This candle indicates that there is sufficient momentum for the breakout to sustain itself.
The confirmation candle should ideally be larger than the previous candles, showing that the market is reacting strongly to the breakout level.
A common confirmation candle could be a bullish engulfing candle after price breaks above resistance, signaling that buyers have taken control.
Alternatively, a bearish engulfing candle after a breakdown below support signals that sellers are in charge.
It’s critical to wait for the candle to close, as this confirms that the breakout is not a false move.
Many traders make the mistake of entering too early, before the breakout candle closes, which can lead to entering a fakeout where
the price quickly reverses back into the range.
Confirmation candles provide the necessary reassurance that the breakout is valid and that market momentum is on your side.
Avoid entering on smaller candles or weak candles, as these may indicate a lack of conviction from the market participants.
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