Definition: Get the highest rated stock from Americanbulls for this pattern >>>
The Bearish Deliberation Pattern is a derivative of
the Bearish Three White Soldiers Pattern. This pattern
also shows a weakness similar to the Bearish Advance
Block Pattern since it becomes weaker in a short period
of time. However here the weakness occurs all at once
on the third day. The small third body of the pattern
shows that the rally is losing strength and a reversal
is possible.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see long white bodies in the first and second
days.
3. The second day has a higher close than the first
day.
4. Then the third day opens near the second day's close.
5. The third day is typically a short white candlestick,
a spinning top or a star that gaps above the second
day.
Explanation:
The Bearish Deliberation Pattern appears after a sustained
upward move and is suggestive of the fact that the rally
is losing strength and a reversal is possible. The formation
is a proof that the bulls’ strength is at least
temporarily exhausted.
Important Factors:
The last small white candlestick may show a gap away
from the long white body, thus becoming a star, or it
can be riding on the shoulder of the long white real
body.
The Bearish Deliberation Pattern is not normally a
top reversal pattern but it has potential to precede
a meaningful price decline. This pattern is more important
at higher price levels. It must be used to liquidate
long positions but it is yet too early for short positions.
A confirmation on fourth day is required to confirm
that the uptrend has reversed. This may be in the form
of a black candlestick, a large gap down or a lower
close on the fourth day.
