Instructor's Response:
Sure...
Take a look at the chart below...
This USDJPY pair is in a downtrend on the Daily chart so we would be looking for opportunities to short the pair on this 1 hour chart. That being said, note the two long wicked candles above which I have placed stops.
A long wick indicates that price traded up to that level (the top of the wick) but the move could not be sustained. Potentially, that will indicate that a move to the downside may take place since the bulls/buyers could not sustain that move to the upside and the bears/sellers won out. The wick provides an excellent spot to place a stop as price tested that level recently and could not trade above it .
In a buying scenario, the trader would look for long wicks below the bodies of the candles and the stops would be placed under the long wicks in that case.
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