Introduction
In trading, timing and structure matter as much as direction. One of the most important parts in my fractal model is the reversal candle, what I call candle 2. Learning to read its wick, body, and context allows you to anticipate whether the next move will trend aggressively or just retrace. Candle 2 also has the ability to be traded when certain criteria is met. This blog will walk you through the difference between expansion and reversal candles, how wick size affects your targets, and how to apply this knowledge across all timeframes for higher-probability trades.
Understanding Expansion vs. Reversal Candles
An expansion candle has
Small wicks on both ends
A large body
Clear momentum in one direction during its time period
A reversal candle
Opens, makes a large opposing run (creating a long wick), then closes near its open
Signals a possible shift in direction, but not all reversals are equally tradeable
Key takeaway: Small wicks support further expansion in the same direction. Large wicks limit expansion potential because the range has already been exhausted.
Why Wick Size Matters for Target Setting
Small wick reversal: Price hasn’t used much range to create its wick, so it can expand further in one direction. Targets can include the previous candle’s low or high, liquidity points, and standard deviation projections.
Large wick reversal: Price used most its range creating its wick. If a reversal is to occur, price is likely to return toward the open price or current candle lows/highs rather than trend far.
Think of wick size as a fuel gauge for price movement, less wick, more room to run.
Application
When framing a reversal
Mark the previous candle’s high or low on the higher timeframe (daily, 4H, etc.)
Wait for a sweep of that level
Look for a change in the state of delivery (CISD) to form a protected high/low
Confirm wick size—small wick means you can target deeper liquidity; large wick means keep it tight
Execution
Once the higher timeframe wick is forming
In Asia session, confirm using 1H or 30M charts
In London, confirm using 1H, 30M or 15M charts
In New York, you can drop to 15M or 5M for quick reversals
Execution steps
Identify the wick’s completion intraday
Look for a CISD on your entry timeframe
Define targets based on wick size:
Small wick: Go for range expansion
Large wick: Aim for session lows/highs or the daily open
💡Pro Tip: During New York Session, focus on the 15M for Continuations and 5M for reversals within the daily profile.
Ideal Example: Small Wick Reversal to Expansion
Daily candle sweeps prior high
Intraday price forms a CISD early in the day
Wick is small, supports expansion lower
Targets: liquidity levels, previous lows/highs, or measured projections
Large Wick Reversal Example
Daily candle has already made a strong move against your direction
Wick is long, adjust expectations to target daily open, session lows
Expansion occurs back to the daily open and liquidity in surrounding areas. Notice this reversal is a continuation (C3) on a lower timeframe.
Pro Tip: Use Correlated Assets for Confirmation
If one market is at a key reversal level but another correlated market is weaker or stronger, trade the one that aligns best with your bias. This avoids false CISD and improves confluence.
Below notice GBPUSD (right) has a reversal off its previous day high. It has a small wick which supports expansion lower. Using SMT on the previous day high, the framework from GBPUSD can be applied the weaker asset EURUSD on the left for a short setup.
Reviewing the Logic
Small wick – more potential for range expansion
Large wick – less potential, smaller targets
Always adjust expectations to wick size and session context
Continuations often come the day after a large wick reversal
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