Reading Order Flow: What Every Candle Tells You
You don't need fancy indicators to read volume and order flow. Every candlestick is a story—a record of the battle between buyers and sellers. Learn to read that story, and you'll see what most traders miss.
What is Order Flow?
Order flow is the study of buying and selling pressure. At any moment, either buyers or sellers are in control. Your job is to identify who's winning and trade with them.
The beauty of candlestick analysis: it shows you order flow visually, in real-time, without lag.
Reading Volume Without a Volume Indicator
Candlesticks reveal volume through their structure:
| Candle Feature | What It Means | |---------------|---------------| | Large body | High volume, strong participation | | Small body | Low volume, weak participation | | Body size increasing | Volume entering the market | | Body size decreasing | Volume leaving (exhaustion) |
Key insight: A sudden large candle after several small ones signals fresh volume entering. Pay attention—something is happening.
The Candle Body: Who's in Control?
The body tells you who won the period:
- Large bullish body: Buyers dominated, strong demand
- Large bearish body: Sellers dominated, strong supply
- Small body: Neither side won decisively
The body size relative to recent candles matters. A "large" candle in a volatile market differs from a "large" candle in a quiet market. Context is everything.
The Wicks: Where Rejection Happens
Wicks are rejection. Price went there but couldn't stay.
- Upper wick: Sellers stepped in, rejected higher prices
- Lower wick: Buyers stepped in, rejected lower prices
- Long wicks: Strong rejection
- Wicks on both sides: Indecision, both sides fighting
Trading insight: A long wick at a key level shows that level is defended. The longer the wick, the stronger the rejection.
Where the Candle Closes
Close location reveals conviction:
| Close Location | Meaning | |---------------|---------| | Near the high | Buyers in full control | | Near the low | Sellers in full control | | Middle of range | Indecision |
In an uptrend, watch for candles that fail to close near their highs. This signals weakening momentum before obvious reversal patterns appear.
Impulsive Move Order Flow
Healthy impulsive moves show:
- Large-bodied candles in one direction
- Minimal wicks (little opposition)
- Candles close near their extreme (high for bullish, low for bearish)
- Little overlap between candles
This is what one side in complete control looks like. Don't fight impulsive order flow—trade with it or wait.
Pullback Order Flow
Pullbacks look different:
- Smaller bodies than the impulse
- More wicks (battle between sides)
- More candle overlap
- Slower price movement
Key insight: If pullback candles stay small with wicks, expect the impulse to continue. If pullback candles start growing large with momentum, the trend might be reversing.
Reading Momentum Changes
Momentum shifts before reversals. Here's what to watch:
Healthy Momentum
- Bodies maintain or increase in size
- Minimal wicks against the trend
- Clear progression of highs/lows
Weakening Momentum
- Bodies shrinking
- Wicks growing (especially against the trend)
- More overlapping candles
Exhaustion
- Very small bodies with large wicks
- Doji-like candles at key levels
- Price struggling to make new highs/lows
Order Flow at Key Levels
This is where it all comes together. At a supply or demand zone, order flow tells you if the level will hold:
Level Will Hold:
- Strong rejection wick at the level
- Next candle confirms with momentum away from level
- No immediate counter-pressure
Level Will Break:
- Large body candle closing through the level
- Follow-through candles maintain momentum
- No rejection wicks
Undecided:
- Small indecision candles at the level
- Wicks on both sides
- Wait for clarity before trading
Identifying Trapped Traders
Trapped traders create opportunity. Signs of a trap:
- Strong spike beyond a level (looks like breakout)
- Immediate strong reversal
- Level reclaimed quickly
Those traders who bought the "breakout" now have losing positions. Their stop losses become fuel for the move against them.
Practical Application: Entry Timing
Use order flow to time entries:
- Wait for rejection candle: At your zone, look for a wick + body closing away from the level
- Wait for confirmation: Next candle should move in your direction with a decent body
- Confirm no counter-pressure: Following candle holds gains, doesn't immediately reverse
This three-step process filters many false entries while keeping stops tight.
FAQ
Q: Do I need a volume indicator at all? A: For crypto/forex, candlestick volume reading is sufficient. For stocks, actual volume can add confirmation but isn't required.
Q: What timeframe shows order flow best? A: All timeframes show order flow. Use multiple: HTF for context, LTF for entry timing.
Q: How do I practice reading order flow? A: Replay charts slowly. For each candle, describe what happened: who was in control? Was there rejection? How did it compare to previous candles?
Conclusion
Reading order flow through candlesticks is a skill that takes practice. But once you develop it, you'll see charts differently. You'll spot momentum shifts before indicators signal them. You'll identify trapped traders before the reversal confirms.
Start simple: for the next week, before every entry, ask yourself—who is in control right now? What is the candle structure telling me?
Want to practice? Try our Daily Quiz which includes order flow reading exercises, or continue to our Liquidity Module to learn where order flow creates opportunity.