In ICT (Inner Circle Trader) methodology, the Candle Range Theory is a concept used to understand how Smart Money manipulates price within the range of a single candle or multiple candles, particularly on higher timeframes.
It helps traders identify high-probability entry zones, predict liquidity pools, and anticipate potential reversals or continuations.
1. What is Candle Range in ICT?
The Candle Range is defined as the high to the low of a specific candle — usually on higher timeframes like the daily, 4H, or weekly.
In ICT, the idea is that price tends to respect certain levels inside a candle’s range, especially:
- The Open
- The High
- The Low
- The 50% of the candle (aka Consequent Encroachment)
- The Body midpoint and Wicks
2. Key Levels within a Candle’s Range in ICT
| Component | Role in ICT |
|---|---|
| High | Liquidity resting above (stop hunts) |
| Low | Liquidity resting below (stop hunts) |
| Open | Bias defining level (above open = bullish, below open = bearish) |
| 50% Level | Fair value or CE (Consequent Encroachment) |
| Body | Often respected in order block structure |
3. Application of ICT Candle Range Theory
1. Bias Determination
If the price is:
- Trading above the daily open → Bullish intraday bias
- Trading below the daily open → Bearish intraday bias
Example:
- Daily candle open at 1.2000
- Price trades at 1.2050
- You anticipate long opportunities
2. Using the 50% Level (Consequent Encroachment)
- Traders often use the midpoint of a large candle as a re-entry or reversal level.
- This is based on the theory that Smart Money accumulates orders near the CE.
Example:
- Daily candle: High = 1.2100, Low = 1.1900 → Midpoint = 1.2000
- Price pulls back to 1.2000 before reversing upward
This midpoint becomes a buy zone in a bullish trend.
3. Wick and Body Analysis
- Long wicks suggest liquidity grabs
- Price often returns to body-to-wick transitions to rebalance
Example:
- A 4H candle has a long wick at the top (liquidity grab)
- Price returns to the wick-body zone and rejects → Signal for reversal
4. Example Trade Using Candle Range Theory in ICT
You’re watching the Daily Candle on GBP/USD:
- High = 1.2650
- Low = 1.2450
- Open = 1.2500
- 50% = 1.2550
Price trades:
- Below open = bearish bias
- Into 50% zone → rejection
- Forms FVG + Break of Structure
You look for shorts with target near candle low.
5. Why Candle Range Matters in ICT
- Precision Entry Zones:
Narrow your focus to price levels where Smart Money interacts - Liquidity Mapping:
Understand where stop-losses and breakout trades are placed - High Timeframe Anchoring:
Keep trades aligned with strong structural reference points - Predictable Behavior:
Smart Money often revisits prior candle ranges for entry or exit
6. Tips for Trading with ICT Candle Range Theory
- Use Daily and 4H candles for analysis
- Mark high, low, open, and 50% of prior day’s candle
- Look for reactions at those levels, especially with confluence (Order Block, FVG, SMT)
- Combine with other ICT tools like Daily Bias, PD Arrays, or Breakers
7. Conclusion
The Candle Range Theory in ICT helps traders gain an edge by using key price levels within a single candle to determine intraday or swing trade direction.
By mastering this concept, you can better align with institutional behavior, execute precise entries, and improve trade consistency.
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