Reading Rejections, Liquidity Grabs, and Fakeouts Like a Pro

📌 What Are Wicks?

Wicks (aka “shadows”) are the thin lines that stretch above or below the candle body. They show the extremes of price during that candle’s lifetime—but not where price settled. The body shows the open and close; the wicks reveal the high and low reached.

Wicks are pure insight into rejection, aggression, and liquidity—they expose who won and lost during that period.

🔎 Wick Anatomy – What They Tell Us

• 🟥 Long upper wick on red candle → Failed breakout, bearish rejection
• 🟩 Long lower wick on green candle → Liquidity sweep, bullish reversal
• 📉 Short wicks → Low volatility or strong continuation
• 📏 Long wicks + small body → Indecision, possible reversal setup
• 📈 Large wick through EMA/VWAP but close inside → Algo trap or fakeout

🧠 Wick Psychology – Who’s Getting Hurt?

• Retail chasers often buy or sell at the top/bottom of a wick
• Liquidity providers use wicks to trap stop orders and reverse
• Algorithms deliberately trigger wicks to cause panic or euphoria
• Wicks = footprints of smart money hunting emotion-based entries

🕰️ Why Wicks Look Different on Every Timeframe

Wicks are fractal and compressed differently across timeframes. That long lower wick on the 1m chart? Might just be a dip in the body of the 15m. Here's how to interpret them across frames:

1m–5m (Micro Timeframes)

• Wicks often show stop hunts or false breakouts
• Use to time scalping entries
• Pay attention to wick clusters for local support/resistance

15m–1h (Intraday)

• Wicks represent true rejection zones
• Ideal for trade planning, entries, and invalidation levels

4h–1D (Swing and Macro)

• Large wicks = imbalances, liquidity sweeps, and failed auction zones
• Great for swing entries and long-term directional bias

📍 Wicks in Relation to EMA, VWAP, and SMAs

• 🔻 Wick through EMA but close below → Rejection, high-probability short
• 🔺 Wick into VWAP + close above → Strong reclaim and long signal
• ⚠️ Multiple wicks around VWAP or EMAs → Chop zone or algo-driven absorption
• 🔑 Always confirm with volume and candle body close—wicks alone lie

🎯 Practical Wick Setups by Trade Type

✅ Scalping (1m–5m)

• Long wick into prior support, spike in volume → enter long w/ tight stop
• Avoid entering on early wick, wait for close and confirmation

✅ Intraday (15m–1h)

• Large wick rejection of key EMA or prior high → setup for reversal or fade
• Use wick zones for limit orders or invalidation levels

✅ Swing Trades (4h–1D)

• Sweep of previous high/low with massive wick + close back in range → high-RR trade
• Wick defines risk box; candle close defines conviction

✅ Straddle/Event Play

• Wait for initial wick run in both directions, then identify real break and volume
• Avoid entries inside the wick zone until direction confirms

🧩 Final Thoughts: Wicks Don’t Lie (But They Do Mislead)

Most traders chase candle bodies. Professionals read the story the wick tells. It’s the market’s raw emotion—exposure of overleveraged greed or fear.

Use wicks in conjunction with:

• Volume
• Key moving averages (EMA/VWAP)
• RSI/MACD shifts
• Price structure and context

The wick is where liquidity hides—but your edge lies in learning when not to react to it.

📌 Save this breakdown and revisit every time you see an unexplained reversal. Chances are... it started with a wick.