The Three Advancing White Soldiers, the Advance Block, and the Stalled Pattern
The Three Advancing White Soldiers
The Three Advancing White Soldiers, which is sometimes referred to simply as the Three White Soldiers, the Advance Block and the Stalled Pattern are three similar candlestick patterns thatconsist of three bullish candlesticks. These are three moderate trend reversal patterns. The Three Advancing White Soldiers usually indicates a weakness in an established down trend and the potential emergence of an uptrend. However, the Advance Block and the Slatted Pattern have bearish connotations, and indicate possible weakness in an uptrend.
Three Advancing White Soldiers
The Three Advancing White Soldiers pattern is the opposite of the Three Black Crows pattern. It is called the Three Advancing White Soldiers patternbecause it consists of three relatively long bullish (advancing) candlesticks that are light in color. Each of the three candlesticks should close on or near the high price for the period and, with each candlestick making steady advances in price. Each candlestick should not have long upper shadows or wicks and should preferably open within the real body of the preceding candlestick in the pattern, though the latter is not essential. When this pattern appears in a downtrend, it indicates the potential emergence of strength and a possible trend reversal. However, if the three candlesticks are over extended and make significant advances you may need to be wary of overbought conditions.
The Advance Block
The Advance Block pattern is similar in appearance to the Three Advancing White Soldiers pattern as it also consists of three bullish candlesticks that are light in color. However, each successive candlestick in this pattern has a shorter real body and possibly longer shadows. The shorter real bodies (and possibly longer shadows) indicate an increasing weakness and when it appears in an uptrend, it warns of a potential end to a rally. However, this is a moderate pattern and does not necessarily indicate the emergence of a downtrend as the candlesticks are still bullish. Therefore this pattern should be used to protect a long position rather than entering a short position. The appearance of a bearish candlestick pattern, which would signal the start of a possible downtrend, should be used to enter a short position.
The Stalled Pattern
The Stalled Pattern, which is also referred to as the Deliberation Pattern, is another candlestick pattern that consists of three bullish candlesticks that is similar in appearance to the Three Advancing White Soldiers pattern. However, while the first two candlesticks in this pattern have a relatively long real body, the third candlestick has a short real body, indicating that the uptrend is running out of momentum. The third, smaller candlestick can gap away from the other two candlesticks, in which case it becomes a star. Like the Advance Block, the Stalled Pattern does not necessarily mark the emergence of a down trend and is more of an early warning that the uptrend is weakening. Therefore the Stalled Pattern should also be used to protect a long position rather than be used to enter a short position.
The dark-cloud cover pattern is the opposite of the piercing pattern and appears at the end of an uptrend. It is a dual candlestick pattern with the first candlestick being light in color and having a large real body. The second candlestick must be dark in color, must open higher than the high of the first candlestick and must close down, well into the real body of the first candlestick. The deeper the second candlestick penetrates the first, the more reliable the pattern becomes.
The dark-cloud cover pattern is also more reliable when it appear at or near a resistance line ...
The Hanging Man and Hammer candlestick patterns are related trend reversal patterns that may appear at the end of an uptend or downtrend respectively. This is a single candlestick pattern that with a short real body, little or no upper shadow and a long lower shadow that must be at least twice as long as length of the real body. The color of the candle is not import, only its location in the current trend.
The Hammer pattern is called a takuri in Japanese, which means testing the water for its depth. This is the bullish version of the pattern. A bearish ...
The Engulfing pattern is a reversal candlestick pattern that can appear at the end of an uptrend or at the end of a downtrend. The first candlestick in this pattern is characterized by a small body and is followed by a larger candlestick whose body completely engulfs the previous candlestick's body.
The colors of the candlesticks that make up the engulfing pattern are important. When the engulfing pattern appears at the end an uptrend, it is a bearish reversal signal and indicates a weakness in the uptrend and ...
Belt Hold Lines
The Belt-Hold candlestick pattern is a minor trend reversal pattern. It is a single candlestick pattern that consists of a Marubozu candlestick that can be bullish or bearish. A bearish belt-hold line consists of a single dark candlestick that opens at or near its high and closes at or near its low, while a bullish belt-hold line consists of a single rising candlestick that also opens at or near its high and closes at or near its low.
The length of these candlesticks indicates the extent of its significance, which is further enhanced when it appears near market extremes as in an ...
Three Black Crows
The Three Black Crows pattern is the bearish counterpart of the Three Advancing White Soldiers pattern. It is a reversal pattern that consists of three bearish candlesticks that should come into consideration when it appears within an established uptrend, where it indicates a weakness in the uptrend and, potentially, the beginning of a down trend.
Each of the three candlesticks in the Three Black Crows pattern should be relatively long bearish candlesticks with little or no lower shadows. Each of the candlesticks in this pattern should mark a steady decline in ...
Reversal patterns mark the turning point of an existing trend and are good indicators for taking profit or reversing your position. Generally, trend reversal patterns indicate that a support level in a downtrend or a resistance level in an uptrend will hold and that the pre-existing trend will start to reverse. These patterns allow you to enter early in the establishment of the new trend and are usually result in very profitable trades.
The common reversal patterns include the double tops and double bottoms, triple tops and triple bottoms, broadening tops and broadening bottoms, ...