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A candle body that sits inside the previous wick

This is a small detail I started paying attention to on M5. You get a candle with a long upper wick, and then the next candle's whole body, open and close, fits inside that wick. Price never manages to get back above the level the wick rejected, but it also doesn't drop away. It just sits up there in the zone the wick covered.

People usually read a long upper wick as rejection, and the textbook expectation is that price moves lower afterwards. When the next body stays inside the wick instead, the sellers who made the wick aren't following through. Buyers are absorbing it at prices that were rejected a few minutes ago. More often than not, in my experience looking through charts, that resolves with price going back through the top of the wick.

The opposite applies to a long lower wick followed by a body that sits inside it. Buyers made the wick, but the next candle trades in the area they rejected and can't lift off. That leans bearish.

I don't trade this as a standalone signal. It's a read on whether a rejection candle is holding. If I'm short off a big upper wick and the next body sits in the wick zone, I'm less patient with the trade. If it closes back below the wick, the rejection is confirmed and I give it room.

The candle after matters too. If you get two bodies in a row sitting inside the original wick, that's stronger than one. The market has now spent ten minutes trading at prices that were supposedly rejected. It's hard to call that rejection anymore. At that point I'd treat the top of the wick as the line and look for a break above it instead of the short that the original candle seemed to offer. Three bodies in a row inside the wick is about as clear as it gets. By then shorts who sold the wick are under pressure, and their stops above the high become fuel for the break.

Location changes how I read it. A long upper wick into a higher timeframe level or the prior day high has more behind it than one that formed in the middle of nowhere. If the body that follows sits inside a wick that tagged a big level, the sellers there may simply be taking their time to work their orders, and the short can still play out. In open space, with no obvious level above, the same pattern is more likely to mean the wick was a quick stop run and price is ready to carry on higher. Equally, the same pattern under a wick that tagged a daily level deserves more patience from the short side.

Fairman, a body inside the previous wick is a subtle detail. It shows that the price level of the wick rejected price and the next bar failed to recover it. Counting how often price continues in the direction of the rejection after such a pair of candles would show whether the detail has value as a filter. A test could also separate wicks rejected near round numbers from those in empty areas.

Volume can help here if your feed's tick volume is any good. A wick that formed on heavy tick volume followed by a quiet body inside it suggests the move was a flush and the market has calmed. A wick on light volume followed by a busy body inside it suggests people are actively buying into the rejected area. It's not precise, but it's another clue about which side is doing the work. It works the other way too, under a lower wick. Busy bodies inside a buying wick on heavy tick volume mean sellers are leaning on it, and that wick is less likely to hold as support once they keep pressing.

On M1 this pattern is mostly noise because wicks are tiny and bodies jump around. M5 and M15 are where it starts to mean something. On H1 it can be quite good, but the time it takes to play out is beyond what I'd call a scalp. I keep it to M5 during the active sessions, where the wicks are big enough to matter and the next candle comes quickly. Gold on M5 is an exception for me since its wicks are large even during quiet periods, so I'd test it separately before trusting it there. Indices are similar. The pattern seems most readable on the major FX pairs during London.