Candle range theory in gold trading
Candle range theory (CRT) says a higher-timeframe candle often sweeps one side of the previous candle's range and then travels to the other side.
Also called CRT, Candle range model, CRT model
Candle range theory (CRT) is a model that treats each higher-timeframe candle’s high and low as a range containing liquidity. The typical pattern is: a candle (the reference) sets a range; the next candle sweeps above its high or below its low, fails to hold, and then moves toward the opposite end of the reference candle’s range. Traders apply it on 4-hour, daily and weekly candles.
How it applies to gold trading
Gold’s habit of running a prior high or low and reversing fits CRT well. A trader marks the previous 4-hour or daily candle’s high and low. If the current candle trades below the low and then closes back inside, the target becomes the reference candle’s high. Entries are usually refined on a lower timeframe with a market structure shift or a fair value gap, and the stop goes beyond the sweep.
CRT is a framing tool. It does not say which side will be swept first, and on trend days the “sweep” can turn into a genuine breakout.
Worked example
Example (hypothetical numbers): the previous 4-hour candle ranged from 3,990 to 4,030. The next 4-hour candle drops to 3,984, sweeping the low, then reclaims 3,990. On the 15-minute chart gold breaks a lower high at 3,996. A trader buys at 3,995 with a stop at 3,982 ($13) and targets 4,030 ($35).
A common mistake
Ignoring the higher-timeframe trend. In a strong downtrend, the sweep of the low is often the start of continuation, not a reversal.
See also: Liquidity sweep, Turtle soup, Power of three (AMD), Previous day high and low.
Frequently asked questions
What is CRT in trading?
Candle range theory, a model in which a higher-timeframe candle sweeps one end of the prior candle’s range and then targets the other end.
Which timeframe is best for CRT on gold?
The 4-hour and daily candles are common reference ranges, with entries refined on 5 to 15-minute charts.
Is CRT the same as power of three?
They overlap. Power of three describes accumulation, manipulation and distribution within one candle; CRT focuses on the prior candle’s range as the target.