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To evaluate the performance of the pattern in your stock exchange within the context of other global markets, please refer to the table below. Locate your stock market to see its ranking among others. This will provide insights into the pattern’s strength and reliability, aiding you in your buying and selling decisions.
BEARISH BREAKAWAY
Definition
This four-candlestick pattern begins with a strong white candlestick. The following three days, after an upside gap, see consecutively higher prices. However, on the last day, the limited price gains of the previous days are completely erased, and it closes within the gap between the first and second days. This indicates a potential short-term reversal.
Recognition Criteria
1. The color of the first strong white candlestick represents the current uptrend.
2. The second candlestick is also bullish, and its body opens with a gap in the direction of the trend.
3. The third and fourth candlesticks continue in the direction of the trend. The third candlestick should be black, but it can also be white like the fourth candlestick.
4. The fifth candlestick is black and closes within the gap created between the first two candlesticks.
Pattern Requirements and Flexibility
The first white candlestick in the Bearish Breakaway pattern should not be short. However, the following three white candlesticks after the gap can be short, with the third candlestick in the middle also possibly being black. The final black candlestick should close within the gap but should not fill it.
Trader’s Behavior
The uptrend has accelerated with a significant gap and then begins to lose momentum, though it continues in the same direction. The gradual weakening of the uptrend is quite evident. Finally, a downward movement completely reverses the price action of the previous three days. The reversal implication is caused by the gap not being filled. A short-term reversal has taken place, but a confirmation may still be necessary.
Sell/Stop-Loss Levels
The confirmation level is determined by the last close. For confirmation, prices should fall below this level.
The stop-loss level is defined as the last high. If, following the bearish signal, prices rise instead of falling and either close or make two consecutive daily highs above the stop-loss level, without detecting any bullish pattern, the stop-loss is triggered.