Rule 5 - 5 consists of 5 main factors of the candle and 5 stories that candles want to tell traders.

FACTOR 1: THE LENGTH OF THE TAIL

Candle tail length can give you clear information about how volatility a market is. The larger the tail of the candle, the higher the volatility of the market.

FACTOR 2: THE RATIO BETWEEN THE TAILS (UPPER/LOWER TAILS)

When the price in a period of time is pushed down and pushed up continuously (strong oscillation), it leaves a large tail at both the upper and lower sides (like a spinning top). Depending on whether this ratio is large or small, it shows how much hesitation more or less the market is.

FACTOR 3: THE POSITION OF THE REAL BODY

Does the candle you are observing have a real body right above the top and the bottom of the candle pointing downwards (hammer candlestick pattern)? With the real body positioned right next to the top, this candle will certainly have stronger buying power than the candle with a middle body (the spinning top candle pattern).

FACTOR 4: BODY SIZE

A large body candle demonstrates very strong price pressure that was formed during that time period.

FACTOR 5: THE RATIO BETWEEN AND TAIL

The big real body and a small tail of the candlestick show that the price went from opening to closing without too much difficulty (ie price pressure in one direction). On the contrary, the long tail and small real body show the hesitancy and pressure of price balance between the sellers and buyers.

At this point, if we combine all 5 factors, we will have a total of 5 cases where the candlestick occurs: (1) Strong buying, (2) Strong selling, (3) Sellers try to push prices down, but the buyer has completely controlled (4) The buyer tries to push the price up, but the seller has completely controlled (5) The seller and the buyer are balanced.


After you have understood the 5 - 5 rule, the next step we need to apply this rule to understand candlestick patterns. Any combination of candlestick patterns gives the shape of a single candle like a pinbar which can be an engulfing pattern (below image).



This is just a simple example for you to easily understand and grasp the rules of each candlestick pattern, whether the pattern is a combination of 2, 3, or 5 candles.

Initially, you may not be familiar with this new reading, but after applying for a while, you will no longer have to remember hundreds of candlestick patterns, only 5 stories that candles want to tell you...