The High Wave candlestick is a subcategory of the Spinning Top candlestick and just like the Spinning Top it is a clear sign of indecision in the marketplace. The body of a High Wave candle is can be either black (red) or white (green) in color and small in size. The small candle signifies the opening price of the stock and the closing price of the stock were close in value. Yet, the upper and lower wicks or shadows of the candle are very long. The long wicks show there was a large amount of price fluctuation during the candle’s period but ultimately the closing price of the stock ended up near the opening price.
In short, the buyers drove the price high and in return the sellers drove the price low but neither of them was able to definitively swing the direction of the stock one way or the other. Below is an example image of a bullish High Wave candle where the market closed up for the period.
Just like the Spinning Top candlestick, a High Wave candlestick will be found just about anywhere on a stock chart. If the High Wave is found in the middle of a move, it is usually part of a continuation pattern. However, if found at the top of an upward trend or at the bottom of a downward trend it can signal a reversal. As always, it is a good idea to see which way the market moves on the next period candle before making a trading decision.