Forex – Depletion bars
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The depletion bar can be usually found at the end of a trend and it indicated a possible reversal of that trend. It has a significant pyschological aspect, that’s why it is considered one of the most reliable bars.
By studying a candlestick, you can notice that above and below the main candle there are vertical lines that continue for a given length. The vertical line above the candlestick indicates that the quotation has reached to its maximum, while the line below the candlestick indicates that the quotation has reached its minimum and therefore it will rise in the future.
In order to recognize a trend’s reversal you will need to keep in mind three points:
- the bar must be very wide because it develops after a strong quotation movement;
- the closure must be bigger than the opening if the trend is ascending and smaller if it is negative;
- the closure must be above the bar in order to have an ascending inversion and below the bar to have a descending inversion.
The wider is the bar and the less is the thickness of the candlestick, the more accurate will be your prevision on the trend’s reversal.
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