Page 142 - THE MARKET WHISPERER

140 PART 5 - Principles O f Technical Analysis
AAPL Fifteen-Minute Candles

Based on its light color, candle [1] indicates a rise in price: in other
words, the stock’s closing price is higher than its opening price. But a price
rise does not disclose the full story. This candle has more to tell us: it also
has a long topping tail.

What does the tail signify? As already noted, the tail indicates the stock’s
peak price in the fifteen-minute timeframe represented by the candle.
At some point during those fifteen minutes, the stock price reached the
high of the tail, and buyers were in full control. The tail also indicates that
buyers did not manage to maintain that high price. In fact, the tail actually
shows that sellers took over control of the stock! We see that the length of
the tail is almost the full length of the entire candle. Conclusion: there is
a high probability of price reversal, i.e. a drop in price, as indicated in the
candles that follow [1].

Now, to understand the meaning of the tail even better, let’s spread
that fifteen-minute interval between 15:15 and 15:30 into candles of one-
minute long, and examine what really happened more closely.