Introduction
In this blog, we’re diving into Candle 3 within TTrades Fractal Model (TTFM). Candle 2 (the reversal candle), Candle 3 (the continuation), and Candle 4 (the secondary continuation), you’ll see how each plays a role in capturing market structure shifts. Candle 3 is all about continuation moves that follow reversal setups, and learning how to recognize them can sharpen your entries and improve consistency.
The key concept: wick size and expansion
The most important factor when deciding whether to trade Candle 3 is wick size.
Small wick on Candle 2: This usually supports expansion, meaning you can trade Candle 2 directly.
Large wick on Candle 2: This signals a reversal and lack of expansion, so you want to let Candle 2 close and then trade Candle 3 instead.
In simple terms:
Small wick → trade Candle 2.
Large wick → wait for Candle 3.
This distinction helps filter whether you’re trading into strength (continuation) or weakness (reversal or consolidation).
Trading Candle 3 after a reversal
When Candle 2 shows a large wick and closes back near its open, it often represents a reversal. That means price has already used much of its range. Instead of forcing a trade, wait for Candle 3, which tends to provide a cleaner, one-sided move.
Watch for:
- Higher timeframe reversal candle closure (closing back inside previous candle)
- Lower timeframe change in state of delivery (CISD)
- Reach into a point of interest (FVG, High, Low)
- Protected swing (OB)
Once this occurs, you can trade Candle 3 in alignment with the new directional bias.
Example: EURUSD daily to hourly
Daily: Candle 2 showed a strong reversal candle. Price opened, ran lower aggressively, then pushed back up, closing near its open.
Implication: This set up a continuation higher for Candle 3.
Hourly: Dropping lower, traders confirmed the reversal by spotting CISD, SMT, protected swings, and continuation blocks, creating clear long opportunities.
This example highlights why Candle 3 is typically easier to trade than Candle 2. Continuations provide smoother, directional moves.
When Candle 3 isn’t ideal
Not every Candle 3 is high probability:
If Candle 2 was already a strong expansion, trading Candle 3 may mean you’re chasing a move that could retrace, consolidate, or reverse.
In these cases, demand more confirmation on lower timeframes such as protected swings, SMT divergence, or multiple continuations lining up.
Combining higher and lower timeframes
Candle 3 trading is most effective when paired with multiple timeframe analysis:
Higher timeframe: Identifies the reversal (Candle 2) and sets the directional bias for Candle 3
Intermediate timeframe: Confirms the continuation setup (protected swings, order blocks, CISD)
Entry timeframe: Offers refined entries with smaller stops and better risk-to-reward
This fractal alignment, continuation inside continuation, provides the most reliable trades.
Review and key takeaways
Wick size dictates whether to trade Candle 2 or Candle 3
Candle 3 can expand after Candle 2 shows a large wick reversal, setting up a continuation
Always confirm with lower timeframe price action such as CISD, fair value gaps, and protected swings
Avoid chasing Candle 3 after strong Candle 2 expansions and instead wait for clean continuation signals
The highest-probability setups come from multi-timeframe continuation alignment
Candle 3 is the backbone of the model, capturing those strong one-sided moves. Once you understand how to filter when to trade it, you’ll avoid getting chopped in consolidation and instead focus on moves with real momentum.
