Candle 3 Closure: TTrades Fractal Model

how's it going everyone and welcome back to another video in this video

we will be talking about candle 3 closure now within my

fractal model there is a candle 2 in a candle 3 closure if

you haven't already seen my candle 2 closure video please check the link in the description below to check that out but with that said let's get into the pdf and learn about candle 3 closure

Now the first thing you have to understand is the difference between a continuation closure and a reversal closure.

When we have a previous candle's high or low marked out, if price takes out that low, for example, and closes below it, that is a continuation closure.

I'm expecting the next candle to continue lower with the given trend.

Now with a reversal closure, that is when price sweeps out the previous candle's high or low, closes back above it.

So you can see here, price sweeps out the low, closes above it.

I'm expecting price to reverse with the reversal candle and trade back higher. So that is the reversal closure.

So you need to know the difference between a continuation closure and a reversal closure.

Now what is the difference between a candle 2 closure and a candle 3 closure?

In a candle 2 closure, price reversed in candle 2, so then I could look to trade candle 3 and candle 4.

But if you see here, we hit a key level, but price does not have a reversal closure. but cannot expect price to reverse yet.

So here I am either looking for price to sweep out its previous candle's

low here to form a candle 2 closure and then trade higher,

or to sweep out its previous high, form a candle 2 closure, and trade lower, or we can get a candle 3 closure,

which is where price does not sweep out the high or the low, but then closes over the body of candle 2.

You can see here, it leaves the low but closes over the body engulfing this candle.

This is where I can then expect candle 4 to continue higher. In this bearish scenario, you can see we do not get a candle 2 closure.

It closes over the high of candle 1, but candle 3 does not take out the high of candle 2, but closes below the body of candle 2.

So engulfing it, I can then expect candle 4 to trade lower.

So as we let that play out, you can see this is where we get our expansion candle in candle 4, or that continuation.

Now what I do is I pair equilibrium with this. So if we have a nice expansion candle, I'll use the whole candle's range, the upper half of that, and that is where I want to see the wick of candle 4 form if we are going to expand higher.

And in the bearish scenario, I'll mark out the entire range of candle 3, looking for the lower half for candle 4 to continue lower.

Now that you understand the difference between a candle 2 and a candle 3 closure, let's get into TradingView and go over a few examples of this.

So here we are on our first example on EURUSD daily chart. If you notice here, we have a fair value gap.

And then what do we have when price reaches into this area? We have price sweep out its previous candle and close back in.

So this is an example of a candle to closure because price takes out its previous candle, closes back inside as a reversal closure, and then we get this expansion here.

Now let's take a look at this one. Right here we sweep out the previous candle, we close back inside, and we trade lower.

Now if we're going to continue this bullish trend, we have a fair value gap right here. What do we notice? Price reaches into it.

Does it have a reversal closure? No. So that means it's not a candle two closure, and I can't just anticipate price to expand right away in the next candle.

I need to gather some more information. So with this, I have two expectations.

I'm either looking for price to sweep out its previous low and then form a candle two closure, and I can trade the following day, or we're going to get a candle three closure in which price is going to close over the body of candle two.

And here you can see price does close over the body of

candle two so it is a candle three closure and

i can anticipate price to trade higher in the following candle

and there you can see we get a move higher in this

following candle so here we are on our next example on

the four hour in queue chart you can see we have taken out

the swing low here but do we have a reversal candle no we do not because price did not close back inside its previous candle so this is where i need more information i'm going to let another candle print

and here you can see we do go and close over the body

of candle two so it's reasonable to say

that we have formed a reversal here and I could be looking for price to trade higher now where am I looking for price to trade higher from I'm going to mark out the entire range of this candle three

and I'd be looking for this upper half for price to trade higher in the following candle and there you can see we respect the EQ and we go and trade higher we're closing over the previous candles high so we could expect further continuation.

So just to review, what do we have? When we have a point of interest where we are looking for a reversal but we do not have a candle two closure, we need to let another candle print to see if we get a candle three closure.