Candle Range Theory (CRT)

Candle Range Theory (CRT) focuses on identifying trading opportunities based on the behavior and patterns of candlesticks. It uses the price range and specific formations to determine potential breakouts or reversals. Two key setups illustrated in CRT are:

Break Setup

• A breakout occurs when the price surpasses a defined resistance or support level.
• Traders look for strong, consecutive candlesticks with large ranges signaling momentum in the breakout direction.
• Setup Idea: Enter the trade after confirmation of the breakout above the previous high, with stop-loss below the breakout point or recent candle low.

Turtle Soup Setup

• A reversal setup designed to catch false breakouts.
• Occurs when the price breaks a key level but fails to sustain momentum, reversing to the opposite direction.
• Setup Idea: Enter after the price re-enters the previous range, placing a stop-loss above the recent high (for bearish trades) or below the recent low (for bullish trades).

Trade Setup Tips:

• Break Setup: Suitable for trend-following strategies. Ensure strong volume and market momentum to validate the breakout.
• Turtle Soup Setup: Best for counter-trend traders looking for quick reversals. Identify exhaustion in the breakout and use tight risk management.