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All, need some guidance here. I've noticed a pattern on ES/MES where price will put in a reversal (2 bar reversal, Green to Red or Red to Green) and sometimes either the 2nd candle in the reversal will have it's wick dip down or pop up (for shorts) basically clearing out liquidity? and then pushing the reversal through. (I attached a picture, not sure how to describe what I'm seeing).
Anybody have any idea what this is called? I call them Red High Ticks and Green Low Ticks. In that the Most recent red candle's wick is higher than the other candles in the uptrend and it closes RED = Sell
Vice versa for Buys. Green Low Tick is the lowest candle wick in the trend but the candle closes Green = Buy.
Can you help answer these questions from other members on NexusFi?
According to Rob Smith's TheStrat, most of these candles can be classified as directional bars, as opposed to inside or outside bars.
As for why they push price up before rotating down, I don't think we'll ever know as long as we're not in contact with the ones with enough volume to move price.
However, according to Thomas Wade's price action trading system, after a trend channel is broken, generally a new extreme is created before a reversal or a correction. You can maybe consider this rule to be taking action.
