Gxt Beginner course - 3 Phases of price

The Four Phases of Price

The lesson explains how to identify four price phases—expansion, consolidation, retracement, and reversal—using higher- and lower-timeframe candle behavior. These recurring patterns can help traders recognize when price is moving decisively, pausing, continuing after a pullback, or changing direction.

1. Expansion

Expansion is a decisive move, often expected after a reversal. On a higher timeframe, an expansion candle typically has a small wick and closes near the end of its range—near the high in a bullish move or near the low in a bearish move.

On lower timeframes, expansion is associated with:

• Shallow retracements rather than deep counter-moves.
• Opposing-direction candles that appear to support the move, such as down-close candles within bullish expansion.
• Rejection of levels against the move and displacement through levels in the direction of the move. In a bullish phase, lows may be rejected while highs are taken; in a bearish phase, highs may be rejected while lows are taken.
• Gaps or other price features holding as support or resistance.

The instructor uses the C2/C3 terminology: after a reversal or C2 candle, the next phase may be C3 and C4 expansion. In the example, a prior candle closes back inside the range of the candle before it, forming a C2 setup, followed by an anticipated expansion candle.

2. Consolidation

Consolidation is generally expected after expansion, including when price has reached an objective. On a higher timeframe, it may appear as an inside bar: price does not take out the previous candle’s high or low, and the candle closes indecisively or within the previous range.

On a lower timeframe, price is contained between a high and a low, with failure swings at both ends and no clear directional progress. The instructor characterizes this as unproductive price action to avoid trading while direction is unclear.

Suggested approach: Wait for price to take one side of the range, then reassess how it behaves around that level.

3. Retracement

A retracement is a pullback that follows expansion and may offer a setup for continuation. The lesson says to look for it especially after price has expanded into a key level.

Typical signs include:

• Failure swings during the pullback.
• A retracement toward a key level, often a gap.
• Relatively weak or lackluster counter-move action compared with the preceding expansion.

The instructor treats consolidation and retracement as possible continuation phases. In the example of a bearish leg, the desired signs for continuation are a consolidation or retracement that holds the leg’s high-to-low structure. A reversal from a relevant level can then mark the transition from retracement back into expansion; the move may target opposing lows.

4. Reversal

A reversal is presented as a sharp move away from a key level after price has moved into it. On the higher timeframe, it may form a C2 candle. The instructor advises participating in that candle only when its wick is small. If the wick is large, wait for the candle to close and look for the subsequent expansion, or C3.

On a lower timeframe, the reversal may appear as a V-shaped signature:

1. Price expands into a key level.
2. It reacts sharply and expands away from that level.
3. The move away displaces price from the level and may develop into a new expansion phase.

The lesson’s final chart example shows this reversal followed by expansion characteristics, including shallow retracements, opposing candles supporting the move, and a gap supporting price.

Overall Framework

• Expansion is directional movement.
• Consolidation is a range-bound pause with unclear direction.
• Retracement is a pullback that may precede continuation.
• Reversal is a decisive move away from a key level and can lead into new expansion.

The instructor repeatedly emphasizes reading the same behavior across timeframes: use the higher timeframe to identify the broader phase, then examine lower-timeframe price action for its signatures.

Speakers and Sources

• One instructor/narrator presents the lesson and walks through chart examples. No other speakers or named sources are identified in the subtitles.