Price Action & Candlestick Mastery
Before diving into SMC setups, you must master the language of the market. Every candle tells a story about who won the battle between buyers and sellers.
Anatomy of a Candlestick
│ ← Upper Wick (rejection of highs)
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███ ← Body (Open to Close)
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│ ← Lower Wick (rejection of lows)| Part | Meaning |
|---|---|
| Bullish Body (close > open) | Buyers won this candle |
| Bearish Body (close < open) | Sellers won this candle |
| Long Upper Wick | Price was rejected at highs — sellers stepped in |
| Long Lower Wick | Price was rejected at lows — buyers stepped in |
Key Candle Patterns in SMC
1. Bullish/Bearish Engulfing
The second candle's body fully engulfs the prior candle's body. Signals a momentum shift.
Real Example — GBP/USD 4H:
Price drops into a Daily order block at 1.2650. A bearish candle forms. The very next candle opens below the prior low and closes strongly above the prior open — a bullish engulfing. This is institutional absorption. Entry on the next candle open, SL below the wick, target the next liquidity pool.
2. Pin Bar / Hammer
Long wick with a small body. In SMC, this is a liquidity grab candle.
Real Example — XAU/USD 1H:
During London open, Gold sweeps below the Asian low at 2,318.40 with a long lower wick, then closes back above 2,322. The wick grabbed sell-side liquidity. Institutions reversed. Price ran to 2,341.
3. Imbalance Candle (Marubozu)
Full body, no wicks. Represents pure institutional momentum — no contest between buyers and sellers.
When you see a marubozu on the 15m or 1H, mark the candle body as a Fair Value Gap zone. Price will often retrace into it before continuing.
What Wicks REALLY Mean in SMC
Wicks are not rejection — they are liquidity grabs.
- Long lower wick at support = institutions swept sell-stops and absorbed all sellers
- Long upper wick at resistance = institutions swept buy-stops and absorbed all buyers
The moment the wick closes back inside the range = confirmation the trap is complete.
Homework
- On a 1H EUR/USD chart, mark every pin bar from the last 2 weeks
- For each, note: did price sweep a clear level? Did it reverse after?
- This will train your eye to see liquidity grabs in real time