Every candle has its story.
A candle on the chart is not just a simple visualization of the opening and closing price – it is an imprint of price action that often reflects the entire market story.
For example, one daily (D1) candle can contain an entire sequence of events on a lower timeframe (e.g. M15) that correspond to individual phases.
• Accumulation → movement in a narrow range (consolidation), often near the opening price of the candle.
• Manipulation → a sharp movement in the opposite direction (creating a wick) aimed at activating Stop Losses.
• Distribution → the main price movement in favor of large players, which forms the body of the candle.
Every candle thus conceals the structure of market behavior, which can be better recognized on lower timeframes. This allows for a more comprehensive perception of the market – not just based on the shape of the candle, but also on the intention behind its formation.
Top-down approach and more accurate entries.
When using a top-down analysis, a trader first observes the market structure on higher timeframes (e.g. W1 or D1) to gain overall context. They then move to a lower timeframe (H1, M15), where they look for specific price reactions and signals within individual phases.
Common mistakes when reading candles.
Beginner traders often make the mistake of trying to find accumulation, manipulation, and distribution in every candle or every movement – regardless of the market context. It is important to realize that AMD does not occur mechanically, but as a result of market psychology and the intentions of larger players.