01 — What is Candle Range Theory?
Candle Range Theory (CRT) is an approach to studying price movement around the high and low of a chosen completed candle. Those levels become a reference range. Traders observe how price interacts with its boundaries and whether a move beyond a boundary is sustained or rejected.
02 — Mark the reference range
- Choose a completed candle on your chosen timeframe.
- Draw a horizontal line at its high and another at its low.
- Mark the midpoint: (high + low) ÷ 2.
- Wait for subsequent price action. Do not assume the range will hold.
03 — Understand a liquidity sweep
A potential sweep occurs when price trades beyond a previously observed high or low. A return inside the range may be relevant, but a wick alone does not establish why price moved or what will happen next.
Bullish study example: price trades below the reference low, then closes back inside the range. Some traders examine whether price can recover toward the midpoint or upper boundary.
Bearish study example: price trades above the reference high, then closes back inside the range. Some traders examine whether price can move back toward the midpoint or lower boundary.
04 — Confirmation and invalidation
Before interpreting a pattern as actionable, consider higher-timeframe structure, volatility, session timing, relevant news and whether price has actually closed back inside the range. Decide what observable price movement would invalidate the idea. No single candle formation guarantees continuation or reversal.
05 — Risk comes first
Forex and leveraged products can lead to rapid losses. A well-marked range does not remove that risk. If you practice, use historical chart replay or a demo environment before risking money, and document your rules and outcomes honestly.
06 — Your chart-study checklist
07 — How to practise
Choose one currency pair and timeframe. Mark 20 historical reference ranges without looking ahead, then advance the chart candle by candle. Record the setup, whether a sweep occurred, whether price returned inside and what happened next. Look for failures as carefully as successes. This is a study exercise, not a trading system with established profitability.
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