Definition:Get the highest rated stock from Americanbulls for this pattern >>>
This pattern is highlighted by two consecutive Black
Marubozu. They are characterized by the fact that a
gapping black candlestick trades into the body of the
previous day and it is seen during a downtrend. Then
there is another Black Marubozu on the third day showing
sale of positions since it closes at a new low. However
this may give incentive to the shorts to cover their
positions implying that a bullish reversal is now possible.
Recognition Criteria:
1. Market is characterized by downtrend.
2. We see two consecutive Black Marubozu in the first
and second days.
3. Then we see a black candlestick on the third day opening
with a downward gap but trading into the body of the second
day and it is characterized by a long upper shadow.
4. Finally we see another Black Marubozu on the fourth
day that completely engulfs the candlestick of the third
day including the shadow.
Explanation:
Two black Marubozu show that downtrend is continuing
to the satisfaction of the bears. On the third day,
we see a downward gap further confirming the downtrend.
However, prices on the third day start going above the
close of the previous day causing some doubts about
the bearish direction even though the day closes at
or near its low. The next day shows us a significantly
higher gap in the opening. After the opening, however,
prices again go down closing at a new low. This last
day may be interpreted as a good chance for the short-sellers
to cover their short positions.
Important Factors:
The reliability of this pattern is very high, but still
a confirmation in the form of a white candlestick with
a higher close or a gap-up is suggested.
Click on D for Daily and W for Weekly Samples
Disclaimer
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