Reading candles
Shrinking candles
A run of candles with steadily smaller bodies shows a move losing pace.
Widely taught. The Exchange can test it on public price history and will say what it finds.
Common teaching, no published test found.
What it is
Momentum here means how far price travels per candle. When bodies shrink along a trend, each push covers less ground than the one before.
What it suggests
Slowing down is not turning around. It says the move is tiring, which matters most near a level the trader already has on the chart.
How to check it
Compare the last three or four bodies with the ones that started the move, and note where price is relative to the nearest level.
Common mistakes
- Calling a reversal from slowing alone.
- Comparing candles across different timeframes.
How we will test it
On public price history, never on anyone's account. Until it is done, the note above is all we can honestly say.
- Cases: three consecutive candles with shrinking bodies inside a trend
- Measure: how often the next 5 candles close beyond the trend's direction versus against it
- Window: next 5 candles
- Compared with: the same measure after three candles with growing bodies
Related lessons
Written in our own words. Education only, not financial advice.