When to Enter and When to Wait? Clues on the Chart
Sometimes a single candle says more than any indicator. In this article, we explore how candles help make more informed decisions. Read on for examples and real charts.
Now, we focus on the next step: how to know if it's the right time to enter a trade when price returns to a contextual zone.
Decision candles — candles with increased volume inside initiatives — can help with this. They allow you to:
What Are Decision Candles in IA?
IA defines several types of decision candles:
🔸 KC — the candle with the highest volume within an initiative that led to a breakout beyond the previous initiative or range. This candle shows where major players were most active within the initiative. If price returns to its range, movement often resumes. KC is especially helpful when located in the lower part of an upward move (or upper part of a downward one). These candles create good entry zones. If a KC appears at the end of a move and is absorbed by a candle in the opposite direction, it may signal a false breakout. In any case, consider the higher timeframe before making a decision.
🔸 tKC — a temporary high-volume candle that appears after the initiative breaks the previous range. If the new initiative extends beyond the previous one, tKC may become the new KC. tKC also shows who exerts more effort during a correction and what result they get — for example, via the candle body (spread). KC remains unchanged until its extreme is broken, while tKC can change during a correction, reflecting the last high-volume candle. It's useful for analysis but not recommended as a standalone signal.
🔸 IKC — the highest-volume candle within initiatives inside a sideways range. If an initiative contains both KC/tKC and IKC pointing in different directions, priority goes to the candle formed in the contextual zone (impulse boundary, correction level). If none exists, the last-formed candle takes priority.
IKC can change during an initiative, always showing the latest highest-volume candle. After a new initiative begins (in any direction), the IKC is fixed and does not change.
Even though IKC is temporary while forming, it can act as a filter for evaluating the relevance of a trade.
Example: Buyer Initiative in a Range:
Sometimes a single candle says more than any indicator. In this article, we explore how candles help make more informed decisions. Read on for examples and real charts.
Now, we focus on the next step: how to know if it's the right time to enter a trade when price returns to a contextual zone.
Decision candles — candles with increased volume inside initiatives — can help with this. They allow you to:
- evaluate the current strength of buyers or sellers;
- determine if there is confirmation for an entry;
- avoid hasty decisions in uncertain situations.
What Are Decision Candles in IA?
IA defines several types of decision candles:
🔸 KC — the candle with the highest volume within an initiative that led to a breakout beyond the previous initiative or range. This candle shows where major players were most active within the initiative. If price returns to its range, movement often resumes. KC is especially helpful when located in the lower part of an upward move (or upper part of a downward one). These candles create good entry zones. If a KC appears at the end of a move and is absorbed by a candle in the opposite direction, it may signal a false breakout. In any case, consider the higher timeframe before making a decision.
🔸 tKC — a temporary high-volume candle that appears after the initiative breaks the previous range. If the new initiative extends beyond the previous one, tKC may become the new KC. tKC also shows who exerts more effort during a correction and what result they get — for example, via the candle body (spread). KC remains unchanged until its extreme is broken, while tKC can change during a correction, reflecting the last high-volume candle. It's useful for analysis but not recommended as a standalone signal.
🔸 IKC — the highest-volume candle within initiatives inside a sideways range. If an initiative contains both KC/tKC and IKC pointing in different directions, priority goes to the candle formed in the contextual zone (impulse boundary, correction level). If none exists, the last-formed candle takes priority.
IKC can change during an initiative, always showing the latest highest-volume candle. After a new initiative begins (in any direction), the IKC is fixed and does not change.
Even though IKC is temporary while forming, it can act as a filter for evaluating the relevance of a trade.
Example: Buyer Initiative in a Range:
- If an IKC from the seller appears and doesn't touch the lower boundary of the initiative, it's a sign of buyer weakness. Better to wait.
- If the seller's IKC appears on or below the lower boundary and is absorbed by the buyer, it may indicate a false breakout and a possible buying opportunity.
- If a buyer IKC appears in the lower half of the range or crosses the 50% level, it can provide a strong long setup.
Important Notes
🔸Use decision candles only in initiatives interacting with contextual zones.
🔸A decision candle must be confirmed by high volume.
🔸Before entering a trade, always check the higher timeframe. Does it confirm or contradict your entry idea? (Use initiative and decision candle analysis on higher TFs too.)
🔸To find an entry point in a contextual zone:
- Use the current TF if the risk/reward ratio fits your risk management;
- Or drop to a lower TF and wait for a pattern there.
🔸If you're already in a long trade, track how price interacts with seller decision candles from previous seller initiatives. The same applies in reverse for short trades.
🔸Use decision candles only in initiatives interacting with contextual zones.
🔸A decision candle must be confirmed by high volume.
🔸Before entering a trade, always check the higher timeframe. Does it confirm or contradict your entry idea? (Use initiative and decision candle analysis on higher TFs too.)
🔸To find an entry point in a contextual zone:
- Use the current TF if the risk/reward ratio fits your risk management;
- Or drop to a lower TF and wait for a pattern there.
🔸If you're already in a long trade, track how price interacts with seller decision candles from previous seller initiatives. The same applies in reverse for short trades.
🔎 Examples of Using Decision Candles
Here are practical examples of how decision candles help refine entries within the IA framework.
The first example is from the article on contextual zones.
The second is from my post (https://www.tradingview.com/chart/DXY/fHK26mPK-DXY-Attempt-to-change-the-trend/).
The third one clearly illustrates how to use multi-timeframe analysis to support decisions and find entries on lower timeframes.
Here are practical examples of how decision candles help refine entries within the IA framework.
The first example is from the article on contextual zones.
The second is from my post (https://www.tradingview.com/chart/DXY/fHK26mPK-DXY-Attempt-to-change-the-trend/).
The third one clearly illustrates how to use multi-timeframe analysis to support decisions and find entries on lower timeframes.
📌 BTCUSDT
A range formed on the 1H TF. Price dropped below the buyer initiative formed within the range.
A range formed on the 1H TF. Price dropped below the buyer initiative formed within the range.
A seller IKC appeared exactly at the correction level of the dominant buyer initiative (the one where the correction didn't reach 50%).
Later, the buyer absorbed the seller IKC and returned price into the range — a sign of strength and a reason to look for long entries. The daily TF shows a buyer trend.
Later, the buyer absorbed the seller IKC and returned price into the range — a sign of strength and a reason to look for long entries. The daily TF shows a buyer trend.
📌 DXY (Dollar Index)
A range formed on the 11D TF. Price broke above the seller initiative and formed a buyer IKC (touching the level of an unhit buyer target). Marked in light blue.
Then a seller IKC appeared with higher volume, but price remained outside the seller's range. Marked in light red.
The next seller IKC absorbed the buyer candle and brought price back into the seller range — confirming seller strength. The macroeconomic context also supported the idea (global need for a weaker dollar).
A range formed on the 11D TF. Price broke above the seller initiative and formed a buyer IKC (touching the level of an unhit buyer target). Marked in light blue.
Then a seller IKC appeared with higher volume, but price remained outside the seller's range. Marked in light red.
The next seller IKC absorbed the buyer candle and brought price back into the seller range — confirming seller strength. The macroeconomic context also supported the idea (global need for a weaker dollar).
📌 GOLD
The contextual area for buying was the correction low of a dominant buyer initiative. On the daily TF, the seller tested the level with high volume. The buyer absorbed this candle — a strong sign. The buyer's volume exceeded the seller's. Higher TFs confirm a buyer trend.
If your system uses stop-losses (especially when trading with leverage), explore lower TFs to find optimal stop placement.
The contextual area for buying was the correction low of a dominant buyer initiative. On the daily TF, the seller tested the level with high volume. The buyer absorbed this candle — a strong sign. The buyer's volume exceeded the seller's. Higher TFs confirm a buyer trend.
If your system uses stop-losses (especially when trading with leverage), explore lower TFs to find optimal stop placement.
On the 4H TF, price returned to the buyer initiative. It included a seller IKC, which wasn't favorable for long entries — but strong daily TF reaction maintained the long bias.
The 4H buyer initiative's lower boundary was the contextual entry zone. After price returned, a seller candle interacted with this boundary, followed by a buyer candle.
Let's examine this moment on the 1-minute TF.
The 4H buyer initiative's lower boundary was the contextual entry zone. After price returned, a seller candle interacted with this boundary, followed by a buyer candle.
Let's examine this moment on the 1-minute TF.
On the 1M TF, a range formed. The lower boundary of this range aligned with the 4H buyer initiative's lower boundary (marked in light blue).
A buyer IKC formed there, absorbing a previous seller IKC (IKCs can change as initiatives form; light blue/red candles are past IKCs).
This was a strong reason to consider a long. Stop below the low.
Targets: 3068.66 (1M), 3139.69 (4H), new ATH (daily).
A buyer IKC formed there, absorbing a previous seller IKC (IKCs can change as initiatives form; light blue/red candles are past IKCs).
This was a strong reason to consider a long. Stop below the low.
Targets: 3068.66 (1M), 3139.69 (4H), new ATH (daily).
Note how IKCs behaved in the next seller initiative (1M TF range). Seller IKCs showed no progress. The fourth IKC was a buyer candle — no reason to enter shorts or close longs. Final IKC: a buyer candle far beyond the seller initiative.
The examples above show how decision candles help with decision-making in IA. But it's also important to understand their limitations.
A clear trading system doesn't make the market predictable — the market doesn't follow rules. A trading system is like a navigator for the journey through trading: the route may be planned, but the road brings detours, bad weather, sharp turns, steep climbs, and unexpected drops. The market is a living, changing landscape. Sometimes inspiring, sometimes testing. And in those moments, it matters most that you have a guide.
A trading system is a simplified model, an interface for working with the market. It helps you think structurally, notice recurring patterns, and act consistently despite uncertainty. It doesn't guarantee results — but it helps you stay on track when emotions or noise get loud.
For me, initiative analysis and decision candles are that guide. Of course, this approach doesn't work 100% of the time — no system does. Still, it offers clear logic and a firm foundation for decisions.
If a buyer confirms their intent with volume — forming a decision candle or absorbing a seller's one — and does it in a contextual area within their initiative, showing a clear result (movement, bounce, holding the level) — that’s a strong reason to consider going long. Yes, such buyers don’t always lead price to the expected target. Sometimes price reverses unexpectedly. Sometimes it reaches the target only after a stop-hunting move below the candle’s low. And sometimes, neither buyer nor seller forms a decision candle — and price moves without you.
I've seen all these cases — and maybe you have too. Still, despite the uncertainty, the initiative + decision candle method remains one of the most logical and visually clear ways for me to decide: enter or wait. It doesn't guarantee results. But it helps me stay consistent, filter out noise, and avoid rushing when the market only pretends to offer a signal.
A clear trading system doesn't make the market predictable — the market doesn't follow rules. A trading system is like a navigator for the journey through trading: the route may be planned, but the road brings detours, bad weather, sharp turns, steep climbs, and unexpected drops. The market is a living, changing landscape. Sometimes inspiring, sometimes testing. And in those moments, it matters most that you have a guide.
A trading system is a simplified model, an interface for working with the market. It helps you think structurally, notice recurring patterns, and act consistently despite uncertainty. It doesn't guarantee results — but it helps you stay on track when emotions or noise get loud.
For me, initiative analysis and decision candles are that guide. Of course, this approach doesn't work 100% of the time — no system does. Still, it offers clear logic and a firm foundation for decisions.
If a buyer confirms their intent with volume — forming a decision candle or absorbing a seller's one — and does it in a contextual area within their initiative, showing a clear result (movement, bounce, holding the level) — that’s a strong reason to consider going long. Yes, such buyers don’t always lead price to the expected target. Sometimes price reverses unexpectedly. Sometimes it reaches the target only after a stop-hunting move below the candle’s low. And sometimes, neither buyer nor seller forms a decision candle — and price moves without you.
I've seen all these cases — and maybe you have too. Still, despite the uncertainty, the initiative + decision candle method remains one of the most logical and visually clear ways for me to decide: enter or wait. It doesn't guarantee results. But it helps me stay consistent, filter out noise, and avoid rushing when the market only pretends to offer a signal.
