This is the part two of Candlestick Patterns’ Technical Analysis: 4 Weak Bearish Reversal Signals article series which is also the last part of Candlestick Patterns article series. As you know, the Candlestick Patterns article series have discussed about the Strong Bullish Reversal, Medium Strength Bullish Reversal, Weak Bullish Reversal, Strong Bearish Reversal, Medium Strength Bearish Reversal, and half of Weak Bearish Reversal Candlestick Patterns.
In the part one, we have discussed two of Candlestick’s Bearish Reversal Signals which are Bearish Hanging Man and Bearish Shooting Star. For this time, let’s discuss the two others which are Bearish Harami Candlestick Patterns and Bearish Belt Holt Candlestick Patterns.
Technical Analysis of Bearish Harami Candlestick Patterns
Bearish Harami is the two candlesticks patterns which is needed two candlesticks to form the chart pattern. Bearish Harami Candlestick Patterns consists of a long solid white candlestick and a shorter solid black candlestick as like picture below:
As we can see, after a long/significant up trend (bullish), there is a long solid white candlestick which followed by a shorter black candlestick and form the “pregnant” formation. This candlestick patterns can be happened in the various trading time but for simplicity, let’s assume it is happened in daily basis. In the first day, there is a long white candlestick. It tells us the buyers still rule the stocks market powerfully and considered as the continuous up trend (bullish).
In the second day, there is a shorter black candlestick with lower opening price than the first day’s closing price and higher closing price than the first day’s opening price. This second day candlestick tells us that the sellers start to gain the power while the buyers start to lose it. However, the sellers power is not so strong yet so cannot push the stocks market down significantly (which is shown by the short body). It can be also considered the stocks market is indecisive.
However, since happened after a long/significant up trend (bullish), this harami chart pattern can be considered as the bearish/sell signal. Of course, since there is an indecisive factor in here, we must wait for the technical analysis confirmation before decide to sell our stocks/shares. The confirmations can be from the candlestick itself or from other Technical Analysis (TA) Indicators such as MACD, Stochastic, Moving Average, etc. For this article, let’s use the candlestick based confirmation as below:
In picture above, I have added a solid black candlestick and a technical analysis confirmation line. As we can see, the stocks market is confirmed in down trend (bearish) if in the next trading range, there is a solid black candlestick with lower closing price than the first day’s opening price. Please be noted that the confirmation black candlestick mustn’t be happened in the next day but can be in the next several days.
This technical analysis confirmation tells us that the sellers has finally ruled the stocks market in the full power. So, obviously, we have the bearish/sell signals in here and it is the right time to sell our stocks/shares – either to realize our current profit or to cut our loss minimum.
Technical Analysis of Bearish Belt Holt Candlestick Patterns
Bearish Belt Holt is a single candlestick patterns which needed one candlestick to form the chart pattern. Bearish Belt Holt Candlestick Patterns consists of a long black candlestick which is happened after a long/significant up trend (bullish) as like below picture:
As we can see, after a long/significant up trend (bullish), there is a long black candlestick with significant gap up of opening price. This opening price tells us that in the beginning, the buyers still rule the stocks market powerfully and push it up. However, then, the sellers start to gain their power and push the stocks market down strongly until the closing time. It is shown by the long black body and the closing price which is near the lowest price.
This bearish belt holt candlestick patterns tell us that there is a possibility that the sellers will still rule the stocks market in the next trading range since the buyers has lost their power while sellers has gain the full power. So, we have a bearish/sell signal in here but we need to wait for the technical analysis confirmations since the signal is the weak one. The confirmations can be from the candlestick itself or from other Technical Analysis (TA) Indicators such as volume, Fibonacci, MACD, etc.
Since this article is about the candlestick only, let’s also utilize the candlestick to be the confirmation. For Holt Belt Candlestick Patterns, the candlestick based confirmation will look like picture below:
I have added a solid black candlestick and a technical analysis confirmation line in picture above. As we can see, the stocks market is confirmed in down trend (bearish) if in the next trading range, there is a solid black candlestick with lower closing price than the opening price of the white candlestick which is happened right before the belt holt pattern. This confirmation black candlestick mustn’t happened in the next day but can be happened in the next several days.
This technical analysis confirmation tells us that the sellers has finally rule the stocks market powerfully so obviously, we have the sell signal in here. Yeah, it is the right time to sell our stocks/shares before the price will lower in the next trading range. In other word, the technical analysis of Belt Holt Candlestick Patterns tell us the stocks market is reversing to bearish and it is the time to sell the stocks.
Have a profitable stocks trading everyone!