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An OHLC candle summarizes four prices: open, high, low and close. Liquidation data adds information about forced positioning around that movement. Reading both together helps explain why a wick expanded, why a breakout accelerated or why price recovered after a violent sweep. It does not convert the candle into a prediction.
What the candle tells you
The body shows the distance between open and close. The wicks show the extremes traded during the interval. A long lower wick indicates that price moved down and recovered before the candle closed, but it does not identify who bought or why. Volume, open interest, taker flow and liquidation events are needed to evaluate the mechanism.
Timeframe changes the meaning. A five-minute wick can be a small detail inside a one-hour trend. Always interpret the candle at the timeframe used to make the decision and check whether a higher-timeframe level explains the reaction.
Add confirmed liquidation events
If a sharp lower wick coincides with confirmed long liquidations, leveraged selling contributed to the decline. A fast recovery can indicate that forced supply was absorbed, but continuation is still possible. If the next candles remain below the broken level and open interest expands again, the first liquidation burst may only be part of a wider deleveraging process.
A strong upper wick with short liquidations can show a squeeze that failed to hold. The important detail is not only the event size. Watch whether price accepts above the swept level, returns to the prior range or continues while open interest falls.
Use estimated zones as context
Estimated pools identify areas where a candle could encounter leveraged sensitivity. They should be treated as regions rather than exact prices. When a candle enters a pool, compare its range, close location and volume with previous candles. A wide candle closing near its extreme suggests stronger displacement than a wick that immediately returns.
Do not label a historical wick as a liquidation merely because it touched a modelled band. Only an exchange-reported event belongs in the real layer. The model can explain why an area deserved attention, not prove what happened there.
Read price and open interest together
Price rising with open interest rising often indicates new exposure. Price rising with open interest falling can indicate positions closing, including a short squeeze. Price falling with open interest falling can reflect long deleveraging, while price falling with open interest rising may indicate new shorts or new leveraged longs entering into weakness. None of these combinations identifies direction perfectly, but each narrows the plausible explanations.
A candle-by-candle workflow
First mark the nearby structure and estimated zones. Second observe how the candle reaches the area: gradually, with expansion, or through a gap-like burst. Third confirm whether real liquidations occur. Fourth compare the close, volume and open-interest change. Finally wait for the next candle to show acceptance or rejection.
The goal is not to explain every wick after the fact. It is to build a repeatable process in which candles describe price, liquidation records describe forced activity and estimated pools describe potential risk. Keeping those roles separate produces a clearer reading with less narrative bias.