Candlestick Bearish Patterns

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Bearish Patterns Bearish Falling 3 Methods 1. 1st day is a long black day. 2. Three small body candlesticks follow the 1st day. Each trends upward and closes within the range of the 1st day. 3. The last day is a long black day and closes below the 1st day's close. This is a formation which shows the market taking a breather before continuing it's downtrend. Notice that a new high is not seen during the 4 remaining days of this formation. This gives little confidence to the bulls, making way for the short sellers. Bearish Breakaway 1. 1st day is a long white day. 2. 2nd day is a white day whose body gaps up. 3. 3rd & 4th days close higher each day. 4. 5th day is a long black day that closes inside the gap created by the 1st and 2nd days. The up trend is accelerated by a gap up. The next few days trend up, however start to run out of steam. The last day of the formation shows a breakdown and close below the previous 3 days, however the gap created on the 1st day remains unfilled. Since the gap is not filled and the trend is obviously deteriorating, this implies the reversal signal. Bearish Three Line Strike 1. 1st three days make up the Three Black Crows formation. 2. The last day is a white day that opens below the 3rd day and closes above the 1st day's open. The 4th day is a powerful move up which could represent a lot of short covering. Since the reversal has already played out in a matter of one day, the risk is now higher for those who wish to bet on a reversal. The downtrend should resume.

Bearish Downside Gap Three Methods 1. 1st two day are long black days with a gap between them. 2. 3rd day is a white day that fills the gap of the 1st two days. The gap down on the 2nd day gets filled by the 3rd day. More investigation of the previous weeks is recommended in order to see if this is the first gap. If so, then this pattern is probably displaying short covering to 'close the gap' created and the bearish trend should continue. Bearish Downside Tasuki Gap 1. 1st two days are black days with a down gap between the 1st and 2nd day. 2. 3rd day is a white day which opens within the body of the 2nd day and closes within the gap between the 1st and 2nd days. 3. 3rd day should not fully close the gap. The gap down on the 2nd day does not get filled by the 3rd day. This suggests that the downtrend will continue. Bearish Side-by-Side White Lines 1. 1st day is a black day. 2. 2nd day is a white day which gaps below the 1st day's open. 3. 3rd day is a white day about the same size as the 2nd day, opening at about the same price. The 2nd and 3rd days are a failed attempt to rally. Shorts are basically taking profit here. The downtrend remains intact.

Bearish Abandoned Baby 1. 1st day is a white day. 2. 2nd day is a doji whose shadows gaps above the 1st day's close. 3. 3rd day is a black day that gaps down and contains no overlapping shadows. The gap up on the second day encourages the bulls, however the close on the second day is nearly the same as the open on the second day. This could be a sign of temporary profit taking by the longs, however the third day reveals that the more likely scenario is indecision on the second day. Watch for additional downside price action in the next few days. Bearish Advance Block 1. Three consecutive white days with higher closes each day. 2. Each day opens within the previous body. 3. Each day displays deterioration of the upward move as shown with the long upper shadows on the 2nd and 3rd days. This formation is similar to the Bullish Three White Soldiers formation. However, the Bearish Advance Block chart alerts traders to the weakness of the upside price action since the close of the second and third days are significantly less than their highs. Bearish Deliberation 1. Three consecutive up days (1st two long days) with higher opens and closes each day. 2. 3rd day gaps above the 2nd day's close. Some texts show the 3rd day as closing near the 2nd day. HotCandlestick.com diverges from this philosophy since any small body candlestick on the 3rd day shows weakness. Some might argue that the greater the gap above the 2nd day, the more likely a short term pullback is in order. Granted, a large gap may signal a continuation of the uptrend, but the opportunity to capitalize on a profit for an immediate pullback prior to the return of the uptrend should not be ignored. Stops should be in place when trading in order to minimize potential losses.

3. 3rd day is usually a spinning top or star (small body). This formation is very similar to the Bearish Advance Block. The key difference is that all of the weakness shows up on the 3rd day. The first two days have powerful upward moves. The quick change in sentiment opens the window for daytraders to initiate shorts or capture profits. Bearish Evening Doji Star 1. 1st day is a long white day. 2. 2nd day is a doji which gaps above the 1st day's close. 3. 3rd day is a black day. The bearishness of the doji star created on the 1st two days is confirmed with the 3rd day. If the penetration of the 3rd day is more than 50 percent, then this formation has a much better chance to succeed for the trader. Bearish Evening Star 1. 1st day is a long white day. 2. 2nd day gaps above the 1st day's close. 3. 3rd day is a long black day. The 2nd day gaps higher, but trades in a small range. The bearishness of this indecision is confirmed by the lower close of the 3rd day. Look for lower prices. Bearish Identical Three Crows 1. Three consecutive long black days with lower closes each day. 2. Each day opens at the previous day's close. This formation could represent panic selling. Each closing price establishes the opening price for the next trading day. Additional downside price action should follow. Bearish Three Black Crows Pervasive profit taking takes its toll on those who remain long. This induces a snowball selling effect in the coming days.

Bearish Three Inside Down 1. 1st two days form a bearish harami. 2. 3rd day closes lower than the 2nd day. This is the confirmation signal of the Bearish Harami formation. Bearish Three Outside Down 1. Bearish Engulfing formation occurs making up the 1st two days. 2. The 3rd day closes lower than the 2nd day. This is the confirmation of the Engulfing formation. Bearish Tri Star 1. All three days are doji days. 2. 2nd day gaps above the 1st and 3rd days. This formation is rare, so always be suspect of the data. This pattern is not reliable for stocks with low volume. The huge amount of indecision created by these three dojis must not be ignored by traders. This level of indecision strongly suggests that the trend is about to change. Bearish Two Crows The gap created on the 2nd day gets filled by the 3rd day. This quick pull back does not bode well for the bulls. This price action indicates a short term top. Bearish Upside Gap Two Crows 1. 1st day is a long white day. 2. 2nd day gaps up and is black. 3. 3rd day is black and opens inside the body of the 2nd day, then closes inside the body of the 1st day. The gap created on the 2nd day has already started to be tested by the 3rd day. Two consecutive lower closes places a damper on the bullishness. Look for lower prices and the gap to be filled soon.

Bearish In Neck 1. 1st day is a long black day. 2. 2nd day is a white day which opens below the low of the 1st day. 3. 2nd day closes barely into the body of the 1st day. Identical to the Bearish On Neck formation, except the downtrend may not continue as quickly. Bearish On Neck 1. 1st day is a long black day. 2. 2nd day is a white day which opens below and closes at the low of the 1st day. The 2nd day is unable to close above the 1st day's low. This should bring some discomfort to the longs that entered on the 2nd day. The downtrend should continue shortly. Bearish Separating Lines 1. 1st day is a long white day. 2. 2nd day is a black day that opens at the opening price of the 1st day. The long white day produces skepticism in the bear market. The next day the long black day that forms eases concerns by the shorts. The downtrend should resume. Bearish Thrusting 1. 1st day is a black day. 2. 2nd day is a white day which opens well below the low of the 1st day. 3. 2nd day closes well into the body of the 1st day, but below the midpoint. This formation underscores the lack of buyers. Even though the 2nd day is an up day, it's still unable to close above the midpoint of the previous day's body. This suggests that the downtrend will continue. Bearish Dark Cloud Cover 1. 1st day is a long white day.

2. 2nd day is a black day which opens above the 1st day's high. 3. 2nd day closes within the 1st day, but below the midpoint. A long white candlestick is formed on the 1st day and a gap up is created on the 2nd day. This is encouraging to the bulls. However, the 2nd day closes below the midpoint of the 1st day. Longs quickly question their strategy. Bearish Doji Star 1. 1st day is a long white day. 2. 2nd day is a doji day that gaps above the 1st day. 3. The doji shadows shouldn't be excessively long. The uptrend is in full force with a strong 1st day. All confidence built up by the bulls from the 1st day is destroyed when the 2nd day's gap up closes near its open. Profit takers will quickly appear if the next day opens lower. Bearish Engulfing 1. The color of the 1st day's body reflects the trend, however could be a doji. 2. The 2nd day's real body engulfs the 1st day's body. If not much volume occurs on the 1st day of the Bearish Engulfing formation compared to the 2nd day, then this increases the strength of the pattern. The 2nd day opens above the close of the 1st day, however quickly sells off to finally close below the open of the 1st day. This damages the spirits of the longs and brings into question the bull trend which prompts additional selling in the coming days. Bearish Harami 1. The 1st day is a long white day. 2. The 2nd day is a short day whose body is engulfed by the 1st day's body. A long 1st day with high volume in the existing uptrend brings complacency to the bulls. The next day trades in a small range within the previous day's real body. Light volume on the 2nd

day should give rise to concern by the bulls of an impending change of trend. Look for lower prices over the coming days, especially if the next day provides confirmation of a trend change by closing lower. Bearish Harami Cross 1. The 1st day is a long white day. 2. The 2nd day is a doji day that is engulfed by the 1st day's body. The 2nd day's price range does not pierce the previous day's range and closes about where it opened. Volume on the 2nd day is low which indicates that traders are lacking enough information to decide whether to go long or short. Bearish Kicking 1. 1st day is a white marubozu. 2. 2nd day is a black marubozu and gaps open below the 1st day's open. The gap created by the 2nd day becomes a resistance area. Expect lower prices and for the gap to be tested before breaking back to the upside. Bearish Meeting Lines 1. 1st day is a long white day. 2. 2nd day is a long black day and closes at the 1st day's close. An up day followed by a down day that closes at the previous day's close gets traders to bet on a reversal. It's probably a good idea to wait for confirmation of the downtrend. This would be a lower close the next day.

Bearish Shooting Star 1. Price gap open to the upside.

2. Small real body formed near the bottom of the price range. 3. The upper shadow at least three times as long as the body. 4. The lower shadow is small or nonexistent. The long upper shadow and small real body at the bottom of the trading range are cause for concern by the bulls. They wonder if this is the end of the uptrend and take measures to protect their gains. Bearish Belt Hold 1. Long black day where the open is equal to the high. 2. No upper shadow. A significant gap up occurs. The remaining price action for the day occurs to the downside. This triggers new short positions to be taken. Concern over this price action re-enforces the selling. Bearish Hanging Man 1. Small real body at the upper trading range. 2. Color of the body is not important. 3. Long lower shadow at least twice the length of the body. 4. Little or no upper shadow. 5. Previous trend should be bullish. As with any single candlestick, confirmation is required. The Hanging Man formation shows the price goes much lower than the open then closes near the opening price. This could mean that many longs have positions that they are attempting to sell. Ideally, a black real body Hanging Man with a lower open the following day could be a bearish signal for the days ahead.

2. 2nd day consists of a short body candle that has a high equal to the prior day's high. 3. The color of each candle body is not considered in the matching of this pattern. The price action has trended upward then 2 consecutive days of equal highs signal resistance. This could signal a short term top is forming.

Bearish Tweezer Top 1. 1st day consists of a long body candle.

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