Over View
Alright, let’s dive deep into Candle Range Theory (CRT). I’ll break it
down step-by-step, explaining what it is, how it works, why it’s useful,
and how traders apply it in practice.
This will be thorough practical, and grounded in the principles that
make CRT a powerful tool for understanding market dynamics.
In his thread I’ll cover the theory’s foundation, its integration with
other concepts, practical applications, and even some nuances that
traders often overlook.
Grab a coffee—this is going to be comprehensive!
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Pre - Knowldge:
CRT is often used alongside concepts from the Inner Circle
Trader ICT methodology—like liquidity sweeps, the Power of 3
(Accumulation ,Manipulation , Distribution), and key levels—to
spot high-probability trading setups.
At its core, CRT is about decoding the story each candlestick tells
about market behavior.
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What is CRT:
Candle Range Theory (CRT) is a technical analysis framework that views each
candlestick on a price chart as a self-contained "range" of price action.
This range is defined by the candlestick’s high and low, with the open and
close providing additional context about market sentiment within that range.
The core idea is that every candlestick—whether on a 1-minute, 1-hour, or
daily chart—represents a battle between buyers and sellers, and the
resulting range tells a story about liquidity, volatility, and potential future
price movement.
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The Anatomy of a Candlestick
To understand CRT, we first need to break down a candlestick’s components:
High and Low: These define the range—the maximum and minimum prices reached
during the candle’s timeframe A.K.A battlefield of price action.
Open and Close: These show where price started and ended, revealing the net
sentiment (bullish if close > open, bearish if close < open).
Body: The area between open and close, indicating the strength of conviction.
Wicks (Shadows): The extensions above and below the body, showing rejected
price levels where buyers or sellers failed to maintain control.
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Lack of Strength
Less Conviction
Rejection of
Lower Price
Battle field of
Price action
Core Mechanics of CRT
Here’s where CRT gets interesting. It’s built on a few repeatable
observations about how price makes a Reversal around
candlestick ranges:
Every Candle is a Range: The high and low of a candle are natural
boundaries. Price tends to respect these levels as support and
resistance until external forces (liquidity grabs or mitigation of
POI) push it beyond them for reversal or continuation.
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Boundaries for Continuation Boundaries for Reversal
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Core Mechanics of CRT
CRT-High: Candle’s high. Liquidity above (stops, breakout traps).
CRT-Low: Candle’s low. Liquidity below (stops, panic sells).
Equilibrium: 50% of range. Key level for reversals or
continuation.
Price sweeps CRT-High or CRT-Low to grab liquidity, then
reverses or runs from support or resitance.
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Reversal After Liquidity Grab Runs from POI
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Reversal After Liquidity Grab Runs from POI
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Core Principles of CRT
1. The Range as a Battleground:
The high and low of a candle represent the extremes of buyer
and seller activity.
Price often revisits these levels as the market tests support,
resistance, or liquidity pools.
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Core Principles of CRT
2. Timeframe Relativity (Fractal)
CRT emphasizes analyzing ranges across multiple timeframes
(e.g., 1-minute, 5-minute, 1-hour, daily) to see how smaller
ranges fit into larger ones.
A daily candle’s range might contain several hourly ranges,
each providing context for the next.
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The Fractal Nature
High
Daily Candle: H1 Structure:
Close
Open
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Low
Core Principles of CRT
3. Liquidity and Manipulation:
Markets often move beyond a candle’s high or low to
“sweep” stop-loss orders (liquidity) before reversing.
CRT helps traders anticipate these moves by focusing on
how price behaves at range extremes to anticipate Reversal.
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Core Principles of CRT
4. The Power of 3
(Accumulation, Manipulation, Distribution)
Accumulation: Price consolidates within a range as smart money builds
positions.
Manipulation: A false breakout (e.g., above the high or below the low)
traps retail traders.
Distribution: Price expands out of the range as smart money exits and
the trend begins. @Currency_Raid
Simple But most effective when aligned with Time
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How to Apply Candle Range Theory in Trading ?
Where does the Range get formed exactly?
What was the Time based approach ?
What are the Steps to trade CRT?
All the questions will be filled in near future.
Be curious & Be Structured
@Currency_Raid
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