How I Use Candlesticks, Key Levels, and Liquidity Traps to Time Trades

If you want tighter entries and cleaner exits, you need more than just patterns. You need to read the battle zone—candlesticks, support/resistance, and where traders get trapped.

Step 1: Read the Candles

Candlesticks aren’t signals—they’re footprints of aggression.

• Big bodies show conviction
• Long wicks reveal rejection
• Engulfing patterns signal power shifts—but only in the right spots

Step 2: Mark the Battlefield

Support and resistance aren’t lines. They’re zones where traders react.

These include:

• Premarket highs/lows
• Previous day’s close
• VWAP, 5 EMA, 200 SMA

Price doesn’t just stop there—it either reverses hard or breaks and retests.

Step 3: Spot the Trap

Liquidity traps happen when the market fakes one side out, then reverses violently.

Common signs:

• Engulfing candle breaks key level → fails to follow through
• Breakouts with low volume → snap back inside range
• Traders chasing → market punishes late entries

The best trades happen when a trap sets, emotion floods in, and you strike against the crowd.

The Setup I Hunt

Example: SPY prints a bearish engulfing candle right into resistance from premarket high. Price rejects, stalls, then breaks the engulfing low = short trigger.

Why it works: Candlestick shift + key level + trapped longs = clean entry.

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