Understanding How Price Moves: The Role of Unfilled Orders and Candlestick Charts

Understanding How Price Moves: The Role of Unfilled Orders and Candlestick Charts

In any financial market—whether stocks, crypto, forex, or commodities—price movement is largely driven by the balance between buy and sell orders. One fundamental principle traders rely on is this:

As price rises, it approaches areas where many unfilled sell orders are sitting. As price falls, it approaches areas filled with unfilled buy orders.

These clusters of unfilled orders represent supply and demand zones, and they act like magnets. Price is naturally drawn toward them and often reacts strongly when it reaches these areas.

Different Ways to Visualise Price

A price chart can be displayed in multiple formats:

• Line chart
• Bar chart
• Hollow candlestick chart
• Heikin-Ashi candlestick chart (sometimes misheard as “Heineken”)
• Japanese candlestick chart

While each chart type has its own strengths, one stands above the rest in popularity and usefulness:
The Japanese candlestick chart.

This style of charting is favoured by both beginners and seasoned professionals because it provides more information at a glance than a simple line or bar chart. The shape, size, and colour of each candlestick give immediate insight into the market’s behaviour during a specific time period.

Why Japanese Candlesticks Matter for Identifying Supply & Demand

When analysing supply and demand zones, Japanese candlesticks are essential. They visually represent the battle between buyers and sellers:

• Green candlesticks show periods dominated by buying pressure—these are filled buy orders.
• Red candlesticks indicate periods dominated by selling pressure—these are filled sell orders.

By studying the patterns and clusters of these candles, traders can identify where the market previously experienced strong buying or selling. These areas often become key turning points in the future.

For example:

• A cluster of strong red candles near a previous high may signal a supply zone, where sellers aggressively entered the market.
• A series of strong green candles near a previous low can mark a demand zone, where buyers stepped in forcefully.

Understanding these visual cues helps traders anticipate potential reversals, breakouts, and trend continuations.

Final Thoughts

Market prices don’t move randomly—they move toward areas of imbalance. Recognising how unfilled buy and sell orders influence price, and learning to read Japanese candlesticks, gives traders a powerful skillset for navigating the markets with more confidence.

If you’re ready to take your trading knowledge to the next level and truly understand how supply and demand shape every price move, then don’t stop here. My book, SUPPLY & DEMAND APPLICATION IN STOCKS – INVESTMENT GUIDE, breaks down these concepts step-by-step and shows you exactly how to apply them in real market conditions.

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