Breakout rule

By /
  1. momentum candle
  2. low volume
  3. upper wick size should not be more than 10-15% of the candle body

Here’s an expanded, clean and structured version of your candlestick notes, written in a way that fits well with SMC / VSA–style trading education and can be used directly in your course blog or personal notes.

Candlestick Rules & Observations (Trading Notes)

1. Breakout Rule

A valid breakout candle must show commitment and acceptance of price, not just a temporary spike.

Key conditions:

  • The candle should close outside the key level (range high/low, support/resistance, order block, or structure).
  • A breakout candle with a strong body indicates real participation by smart money.
  • Avoid breakouts where price only wicks above/below a level and closes back inside → this often signals liquidity grab or fake breakout.
  • Best breakouts occur when:
    • They break a well-defined range
    • They align with higher timeframe bias
    • They are followed by continuation or a shallow pullback

📌 Rule of thumb:

Close matters more than the wick in breakout confirmation.

2. Momentum Candle

A momentum candle represents aggressive buying or selling and usually appears at:

  • Breakouts
  • Trend continuation
  • Reversals from key SMC zones (OBs, FVGs, liquidity levels)

Characteristics:

  • Large candle body compared to recent candles
  • Minimal opposite-side wick
  • Clear direction (bullish or bearish dominance)
  • Often initiates displacement, breaking structure

Why it matters:

  • Momentum candles show intent, not hesitation.
  • They help confirm that price is being moved, not tested.
  • After momentum, price often retraces to imbalance (FVG) before continuing.

3. Low Volume Candles

Low volume candles indicate lack of interest or participation.

Common interpretations:

  • During a pullback → healthy retracement, not real reversal
  • Near highs/lows → weakness in buyers or sellers
  • After a strong move → pause or consolidation

In VSA context:

  • Low volume on a move against the trend = move is likely corrective.
  • Low volume near resistance = no demand
  • Low volume near support = no supply

📌 Important:

Price moves with high volume, reverses with climax, and pauses with low volume.

4. Wick Size Rule (Upper Wick ≤ 10–15% of Candle Body)

This rule helps filter weak or manipulated candles.

For bullish candles:

  • Upper wick should not exceed 10–15% of the candle body
  • A small upper wick indicates:
    • Buyers stayed in control
    • Little rejection at higher prices

For bearish candles:

  • Lower wick should also be limited to 10–15%
  • Large lower wick = selling pressure not sustained

Why this matters:

  • Large wicks show rejection, absorption, or profit-taking
  • Clean bodies with small wicks show acceptance and strength
  • Strong entries often come from clean momentum candles, not messy ones

📌 Entry Tip:

The cleaner the candle, the clearer the intent.

Summary Cheat Sheet

  • ✅ Breakout = strong close outside level
  • ✅ Momentum candle = intent + displacement
  • ⚠️ Low volume = caution, likely correction
  • ❌ Large wicks = rejection or manipulation
  • ⭐ Best trades come from clean candles + context

If you want, I can:

Scroll to Top