THE BEST SIGNS OF CANDLESTICK

[Igor Pereira]

Candles as Directional Filter: Defining Viets in the Higher Timeframe

By Igor Pereira
Financial Market Analyst
Founder of ExpertFX School

There are numerous applications for candle patterns. However, one of the most strategic uses — and less properly exploited — is to determine the directional bias in the top timeframe to filter operations within shorter periods.

This approach increases the statistical probability and reduces entries against institutional flow.

Exclusive analysis for ExpertFX School – Igor Pereira:
“The candle in the larger timeframe reveals intent. The smaller timeframe offers execution.”

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Why Use Superior Timeframe as a Filter?

The market operates hierarchically:

• The Weekly influences the Daily

• The Diary influences the H4

• H4 influences H1

• And so on

When we ignore this structure, we operate against context.

When we align the greater bias, we operate in favor of the predominant flow.

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How to Determine Viets with Strong Vela Signs

The professional process involves three stages:

Identification of the Relevant Sailing in Timeframe Major

Example:

• Daily Timeframe or H4 in XAU/USD

• Presence of strong rejection or displacement

More structurally relevant sails include:

• Strong weights

• Pin bar in institutional areas

• Expansion candles close to maximum or minimum

These signs indicate real imbalance.

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Structural Context Confirmation

The sail shall occur at:

• Liquidity area

• Order Block

• Relevant support or resistance region

• After structure break

Without context, the candle loses power.

Igor Pereira points out:
“The candle alone does not decide. The valid structure.”

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Run in Bottom Timeframe

After identifying the bias in the Diary, for example:

• We're looking for entrances to H1 or M15.

• We operate only towards bias

• We ignore the opposite signs.

That creates a powerful filter.

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Impact on the Financial Market

Applying this methodology to gold (XAU/USD) generates clear advantages:

• Avoids operating against macro flow;

• Reduces false entries;

• Increases rate of hit;

• Improving risk-return ratio.

Especially in weeks with:

• Inflation data;

• Payroll;

• interest decision;

A strong daily candle can anticipate relevant structural continuity or reversal.

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What's happening in the Bastidores?

A strong candle in the top timeframe usually indicates:

• significant institutional entry;

• liquidity absorption;

• Change of control buyer/seller;

• Start new flow cycle.

Operating against this movement means facing greater capital.

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Common Errors

"> Ignore Structural Zone
"> Mix multiple conflicting biases

Discipline is fundamental.

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What to Expect when Applying This Filter?

Traders using higher timeframe bias:

• They operate less;

• operate more clearly;

• They suffer less emotionally;

• They improve consistency.

Exclusive conclusion – Igor Pereira:
“The largest timeframe defines direction. The smallest defines precision.”

#1 SALE DISACCELERATION
I have been talking about the deceleration concept for some time and we have taught a multi-period negotiation strategy that also uses this approach in our masterclass. It is a super-powerful sailing formation that helps to understand the change of momentum during a long trend.

During the long trend of high, you suddenly see a small Doji candle and then a strong low candle. This sequence indicates that buyers are not so strong and that the price is high enough for sellers to enter.

More importantly, the deceleration pattern is better negotiated during a strong and prolonged trend. The longer a trend lasts, the more likely it will be to see a reversal to the average – especially in the Forex market, which is considered a market of reversal to the average.

Once a deceleration pattern has been identified in the upper time period, the trader may descend to the lower time period to seek negotiations towards the deceleration pattern.

#2 DISACCERATION-CONTINUATION
Deceleration can also be found as a continuation pattern.

In the example below, the price was on a high trend and during the correction phase, the corrective wave gave a deceleration pattern: Low sailing – Doji – High strong sailing.

This pattern indicated that bulls are recovering the trend and that a continuation is likely.

The patterns of continuation are better negotiations at the beginning of a trend because the probability of a successful continuation is higher.

#3 INVOLVING REVERSION
The surrounding candle is very versatile and we will observe several surrounding candle scenarios during this article.

In the example below, the surrounding pattern happened as a reversal pattern. The upward trend had lasted for some time and the surrounding pattern indicated a change in the dynamics.

The large surrounding red candle is significantly larger than the previous high candle. The low sail is also the largest low observable candle during the entire high trend.

Such a significant change in the size of the sail should always attract the attention of traders because it indicates a great change in the buyer-seller dynamic.

#4 INVOLVING CONTINUATION
Enveloping sails can also be used as a continuation signal.

The price had just left the track to start a new downward trend when the price gave a short corrective wave. The price always moves in a manner and during the corrective phases, it may be worth looking for continuation signs.

The two high sails were small, indicating that the bulls were extremely weak and could not raise the price. Suddenly, the trend continued with an engaging sail of low. The break of the surrounding candle signaled that the bulls withdrew and that the bears now continue the downward trend.

As indicated above, paying attention to sailing size during a trend and corrective waves is a great way to improve your graphics reading skills.

# 5 INVOLVING RETRACTION
Did I say the surrounding pattern is extremely versatile?

In this example, I used a 50 EMA as a trend tracking tool. The price was always above EMA, indicating a high trend. During a high trend, traders must seek purchase opportunities.

The best pullback opportunities usually exist when the price returns to the mobile average and then provides a strong signal. Keep in mind that negotiating the touch of a moving average is not enough, but by adding multiple confluence factors to your decision making, chances of choosing the right direction may increase.

When the price reached EMA in the example below, the price also formed a strong pattern of surrounding candles. The right wave, at this point, had been going on for some time and the retreat then offered a much better price for buyers to enter into new negotiations.

# 6 FAKEOUT DOUBLE SUPERIOR
The false pattern is also often called the trap candle pattern, but the idea is the same.

In the example below, the upward trend initially reached a local peak and during the next attempt to continue the trend, the price failed to reach a higher maximum. The price was immediately rejected as soon as it reached the previous maximum.

This pattern is a clear indication that the predominant trend will probably end because buyers do not have the power to continue to achieve higher maximums.

#7 TRIPL TOUCH EXAUSTION
Triple touch is a powerful reversion pattern, as it indicates a loss in trend momentum.

The price on the image below reached three weak maximums after a prolonged high trend. Each push on the top became less strong, the size of the fuses increased and the size of the candle decreased. All these confluence factors indicate that the trend may be losing momentum.

Triple touch, like all other reversal patterns, is best negotiated during/after extended trends. The longer a trend persists, the greater the likelihood of a reversal.

#8 SENDING DOUBLE FUND
Did I say the surrounding pattern is extremely versatile?

Whenever you see a double background after/during an extended trend, this indicates a trend impulse loss. The sellers, in the scenario below, were not strong enough to continue the downward trend. The price was so low that it became increasingly interesting to buyers.

The double background was finished with the purchase of the large high surrounding candle. The significant size of the surrounding candle made this scenario even more powerful. These major impulse changes indicate a significant change in seller-bought balance in your price action charts.

#9 ENGAGE MEET FAKEOUT
Did I say the surrounding pattern is extremely versatile?

In the study of the graph below, the surrounding candle also showed the characteristics of a forgery . The price was in a side consolidation and the breakup occurred with a large engaging CandleStick that also has a long wick up. The fuse indicates a failed attempt to climb and the large body of the low CandleStick shows that buyers have withdrawn completely.

The surrounding candle is the largest low sail observable to this point.

#10 TWEEZER
A CandleStick pattern in Tweezer consists of two CandleSticks with equally long wicks. Tweezer indicates a movement in the opposite direction of the CandleStick wicks.

In the example below, Tweezer also occurred at a key price level. When you look to the left, you can see that the last high trend was also started well at Tweezer's price level. These levels of trends origin generally offer great opportunities to trade trends if there are sufficient confluence factors.

Tweezer also occurred after a prolonged downward trend – making high reversal even more likely. So you can see how we can stack various confluence factors in our favor.

# 11 EGULGING + PINBAR + TRIPL PLAY
Did I say the surrounding pattern is extremely versatile?

I mentioned a few times that the more confluence factors you can accumulate in your favor, the better your price forecast will be. In this graphic study, we have several confluence factors that indicated the potential end of the discharge trend and a low reversal.

The upward trend had multiple trend waves and was extremely extended
The triple touch pattern shows weakening of the high continuation trend waves
Enveloping CandleStick shows a strong low impulse on the third triple touch
Mechs show signs of a Tweezer pattern – indicating a rejection at heights
All signs pointed to the end of the upward trend. After identifying confluence factors, you can go for a shorter period of time to time your entry towards the potentially future downward trend.

# 12 DECELERATION OF THE PINBAR
Once again, we can stack confluence factors in our favor to get a powerful price analysis.

The graph was in a strong upward trend to the left. But the second wave of trend was much shorter than the first. Any momentum indicator will signal a divergence.

High candles decrease in size before the price prints a pinbar with a long fuse. The long fuse is a strong sign of reversal. Following the pinbar, there was a large sail of low. This pattern indicates the deceleration of the high trend and then the acceleration of the new downward trend.

#13 REVERSION IN THE FOREIGN
Let's end with an engaging candle pattern, shall we?

As in the above example, the price was in a weakened trend of high. The trend wave leading to the final top was significantly shorter than the previous trend waves.

At the top, the price first formed an extremely large high CandleStick. However, the next candle was just a short inner candle, indicating the impulse stop. This is not enough to say that the trend may end, but it is another confluence factor.

After the inner sail, the next candle was an engaging CandleStick, showing the new interest of sellers in the market.

CandleSticks They're great! BUT ONLY WITH CONFLUENCE
CandleSticks can provide a lot of important information about what is happening in your graphics. But trading only candles is not recommended because predictive power may not be high enough.

Stacking several confluence factors over each other to reach a strong price analysis can significantly increase the chances of finding the right trend direction .

When it comes to confluence factors, let me summarize once again the most important:

Trend wave analysis. Reverse CandleSticks are best found after extended trends. The continuation CandleSticks are best traded at the beginning of a new trend.
When a trend shows signs of momentum weakening, reverse CandleSticks can succeed more frequently.
The location is important! When a candle sign occurs at a key resistance level, its chances may increase even further.
The size of the candle is important! Extremely large CandleSticks show stronger impulse changes.
When various signs of candles can be combined, the signal quality can also increase.