Is the trend line drawn from the body of the candle or the wick of the candle?!
This dilemma has long puzzled many traders
But in reality, both methods are correct; here’s a simplified explanation.
Choosing the point to draw the trend line (Trendline) depends on your trading strategy and the type of analysis you use (technical or psychological), but there are general principles that can help you choose:
1. Drawing from the wick of the candle (Shadow/Wick)
- Its features:
- Accurately reflects price rejection areas (highs/lows), especially in volatile markets.
- Shows true support/resistance levels where prices fail to break through.
- Useful in analyzing false breakouts (False Breakouts).
- Its drawbacks:
- It may be very sensitive to short-term fluctuations, leading to easy breakage of the trend line.
- Less suitable for high liquidity markets where wicks are long and frequent.
- When do you use it?
- If you rely on strategies based on price rejection (like the Pin Bar model).
- In irregular markets with sharp fluctuations.
2. Drawing from the body of the candle (Real Body)
- Its features:
- Reflects the most significant price movements (opening/closing price).
- Provides more reliable signals in strong markets (clear uptrend or downtrend).
- Less affected by random short-term fluctuations.
- Its drawbacks:
- May overlook the precise turning points indicated by the wicks.
- Less accurate in sideways markets (Range-bound).
- When do you use it?
- In classical analysis of long-term trends.
- If you rely on strategies like large candlesticks (like Marubozu).
• Best according to the scenario
- For precise and dynamic analysis (such as day trading or scalping): use the wicks as they reveal the market's psychological reactions.
- For strong and stable trends: use the bodies as they reflect core price movements.
- To obtain balanced signals: you can draw two lines (from the wick and the body) and consider the break as a condition for trend reversal only if the price breaks both lines.
• A final tip: Test both methods on the chart of a specific pair/asset, and track which one provides more accurate signals in current market conditions.
