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This Pattern signals a :
Reversal
Reliability of this pattern:
High
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| Bullish Candlestick Patterns | | | |
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This Pattern signals a : Reveral
Reliability of this candlestick pattern: Moderate
How to Identify:
Three candles are involved in forming this pattern. On a daily chart, here's how it will unravel:
- 1st day is a bears day (black candle)
- 2nd day is undecisive day (doji) day - here the shadows of this day are below the first day.
- 3rd is a bulls day (white candle) with no overlapping shadows
In the best setup - the shadows of doji should completely gap below the shadows of the first and third day.
Market Psychology:
Bears were ruling on the first day and the second day's opening gap encourages them more - however, the bears having seen good profits start taking them off the market - pushing the close of the day near the open - thus forming a doji.
However, the third day open reveals that the second was more of an indecision by the bears to push their agenda - that gives bulls the upper hand with the opening gap of the second day and thus the bulls take over to rally the market.
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