A “bottoming tail” is a candlestick characterized by a long lower wick (or tail) and a small body, indicating that the asset experienced a significant price drop within the trading period but closed well above the low. This is often considered a bullish signal, suggesting that sellers initially pushed the price lower, but buyers took control and pushed the price back up before the close.
The bottoming tail is most meaningful when it appears after a downtrend or at a known support level, as it can indicate a potential reversal in market sentiment. Traders often use this signal to enter long positions or exit short positions, especially when it’s confirmed by other technical indicators or increasing trading volume.
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