As we discussed in our previous blog post about Long Lower Shadow candlesticks, a Japanese candlestick's lower wick (also called its shadow or tail) plays an important role in conveying the price movement of the interval. It shows the interval's lowest price, while the bottom of the candle shows the opening price (in a bullish candle) or closing price (in a bearish candle). So what happens if the lower wick is shaved off? This means that the interval's opening/closing price (depending on the candle's bullish/bearish sentiment) is the same as the lowest price. In other words, you have a Shaved Bottom candlestick on your hands.
Shaved Bottom Candlestick
This is an easy one! Consisting of just one candle, the Shaved Bottom candlestick has only one defining characteristic. It can appear anywhere on a chart, and it can be white/green (bullish) or black/red (bearish). It may or may not have an upper wick, but (and this is the important part) it cannot have a bottom wick. The tail should be shaved off, the shadow elusive.
The Shaved Bottom (also called the Shaven Bottom) resembles an Inverted Hammer candlestick. In fact, some say the two names can be used interchangeably to describe a candlestick without a lower shadow. Typically, however, the Inverted Hammer has a short body while the Shaved Bottom can have any body length. So in that sense, all Inverted Hammers are also Shaved Bottoms, but only some Shaved Bottoms are also Inverted Hammers.
So what does a Shaved Bottom candlestick mean for you, as a trader?
If the interval's opening price is also its lowest price (forming a bullish candlestick), the bulls have dominated the trading period. Whether the flight is clipped or lengthy, the price has soared upwards. It never drops below the opening price.
If the interval's closing price is also its lowest point, the day has been defined by a bearish sentiment. Although it may have bounced around at the start, the price at the end of the day was also the lowest price of the day.
Sometimes the Shaved Bottom pattern acts as a bottom reversal signal, but you should always confirm this suspicion by watching the price movement following the appearance of this candlestick. Confirmation is crucial, because the pattern isn't very decisive. In fact, other times, when identified in an existing trend, the Shaved Bottom can suggest a continuation of the current price movement.
As a one-candle signal, the Shaved Bottom is both unreliable and extremely common. Although not typically useful as an indicator on its own, check to see if it is part of a larger candlestick pattern.
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