Bid and Ask prices along with volume are the key components of the construction of the chart. Adding a second dimension of Time frame ( such as H1, H4, Daily, Weekly, etc), brings the market structures on the chart. The key to understanding the institutional activities is directly related to these Market structures. In this article, we try to explain how to read the Selling and buying pressure in the market in any timeframe.
The market structure can consist of single or multiple bars. The single bar represents the lower timeframe multiple bars structures. By studying each bar, its closing, and its high and low we can determine the dominance of the market participant such as buyers or sellers. Since each bar or candle present a single period, timeframes are very important from a technical analysis point of view. So let’s understand the single bar and how we can read the buying and selling pressure inside a single bar. If prices are closed in the lower part and it has a high wick, we can safely say that buyers tried to bring the prices higher but sellers did not let them dominate above a certain level and ultimately brings the prices down, another way to read this structure, institutions were interested shorting the market, and if they want to short they bring the price at a higher level to short at the best possible price. So if at the start of each candle prices are moving in a certain direction, we should closely watch the institutional behavior or activities at the lower timeframe.
On the lower timeframe, we should see the reversal or a continuation pattern with small retracement. With our basics Foundation course, you can learn the chart reading skills to identify these reversal points.
Some important single bar formations which give early signals of the market reversals are the following.
