Candlestick Shadows
A show in the figure above, candlesticks sometimes form long shadows (both upper and lower shadows). A long upper shadow indicates that price traded to the high indicated by the shadow but is not sustainable and it dropped back to the close which is much lower the high. A long upper shadow usually indicates resistance and weakness in price momentum. Similarly, a long lower shadow indicates support and weakness in price momentum. Be extremely careful when you see long shadows as they usually signal reversals. However, do not assume that long shadows will definitely result in reversals. The reversal will depend on other factors like resistance, support lines, other candlestick patterns, time cycles, etc.
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