Why it is important to observed Rejection Candles

Any stock ex

Rejection Candles are candles that show price moving strongly toward a particular level but failing to sustain those prices before closing back in the opposite direction. A long upper wick can indicate rejection of higher prices, while a long lower wick can indicate rejection of lower prices. Their significance depends heavily on where they appear. For example, a long upper wick near major resistance can suggest that sellers entered aggressively when price moved higher. Similarly, a long lower wick at established support can indicate that buyers defended lower prices. A rejection candle in the middle of a random trading range may have much less significance. Traders should also consider the candle's closing position, volume, previous trend and subsequent price action. A single rejection candle does not automatically signal a reversal. Strong confirmation from the following candles or a break of nearby market structure can improve reliability. Rejection candles are therefore best viewed as evidence of a failed attempt to hold a particular price level rather than as standalone buy or sell signals.