Soon, however, you see that prices are starting to move back down again… your trade is still making money, but the market price is now moving towards to your entry point. What would you do?
If you’re like most traders, you’ll hang on to the trade… and wait for prices to move up again.
But what happens when prices continue to move even closer to your entry point? What do you think most traders would do in this situation?
They will move their stop loss to the break-even price. By now, most traders would be looking to get out of the trade with no loss if prices move back to their entry price.
And so, all the traders who entered a ‘buy’ trade within this bull candle are now looking to SELL to close the trade.
In tho way, a bull candle represents the range of prices where the previous buyers would be looking to ‘sell’ to close their trade.