High Wave Candle Pattern
The High Wave Candle pattern shows moments when the market struggles to reach a consensus on a security’s value and can’t settle on a clear direction. It marks a market ruled by hesitation, where neither buyers nor sellers have a clear read on where price is heading — supply and demand are evenly balanced. See also our guide to Sushi Roll Pattern.
Read more: Popular Japanese candlestick patterns
When the High Wave Candle forms with a large size, it points to broad market confusion about which way prices are heading.
What Is the High Wave Candle Pattern?
The High Wave Candle is a specific type of reversal Japanese candlestick that has one or two long wicks, with the open and close prices sitting apart from each other.
As with most candlestick patterns, this one shows that market volatility is picking up fast, which can threaten the current trend. Like many patterns, its significance depends heavily on where the market stands. It carries more weight when it forms after a clear downtrend or uptrend, since a shift in direction tends to follow — any cluster of candles showing sharp volatility after a strong trend can point to a possible reversal.
Market Moves the High Wave Candle Reveals
The idea behind this pattern is that during the candle’s period, both bulls and bears tried to push the market their way, but neither side managed to hold onto its gains by the time the candle closed.
The High Wave Candle has a small real body. What sets it apart from other patterns is that in most other candles, the upper and lower wicks are small or roughly equal, while the High Wave Candle has both an upper and a lower wick that are relatively long, which shows greater price volatility.
Read also: What is the inverted hammer candlestick?
How to Identify the High Wave Candle
These patterns show conditions where the market struggles to settle on the value of a security or asset, and they reflect a market dominated by uncertainty and hesitation. Neither buyers nor sellers have a clear picture of where the market is heading, since supply and demand are matched. When these High Wave Candles form with a large size, it signals broad market confusion about price direction.
What the High Wave Candle Tells Traders
The real body of a High Wave Candle can be larger than the real body of other Japanese candlestick patterns, but it should still stay relatively small compared with the candle’s overall range — the distance between the upper and lower wick.
These candlesticks can form in various spots on a chart, including sideways markets. But to be useful — like the doji or the spinning top/bottom — the High Wave Candle signal needs to appear after a downtrend or an uptrend. Used this way, it can point to a possible change in direction, as part of a stronger reversal signal, though outcomes still vary.
How to Trade When You See a High Wave Candle
Technical analysis of past market data — volume, price, support, and resistance — should be used to gauge which way the asset is likely to head; combined with a High Wave Candle, this helps pin down the direction. With that in mind, trading the High Wave Candle comes down to the following:
- Enter a buy trade when price breaks above the high of the High Wave Candle.
- Use a candle close below the low as your stop-loss level.
- Enter a sell trade when price breaks the low, and use a candle close above the high as your stop-loss point.
- Be patient and wait for the next candle after the pattern to close, to confirm the entry point, alongside your own strategy.
Finally, as with all other Japanese candlestick patterns, the trend context in which these signals appear matters a great deal. If you spot a High Wave Candle pattern during a period of price oscillation, it points to market hesitation. But this also applies to the low volatility that reinforces a market.
These signals can also matter when they occur during clear trends, especially extended or strong ones.
Traders need to combine candlestick signals with technical indicators to find and take the best trades. You can also combine Japanese candlestick signals with other trading systems that work well alongside candlestick patterns.
Like many other candles with very long wicks, the High Wave Candle signals that market volatility is picking up fast, which may represent a reversal of the current trend. As with many cases, the pattern’s significance depends heavily on the market’s trading activity.
Read more:
- Japanese Candlestick Patterns: The 14 Most Popular Reversal Patterns
- The Best Types of Japanese Candlesticks
- Live Examples of the Indecision Candle
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Disclaimer
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