BEARISH BELT HOLD
Definition
The Bearish Belt Hold is a single candlestick pattern, essentially a Black Opening Marubozu, that occurs in an uptrend. It opens at the day’s high, and then prices begin to fall during the day against the overall market trend, eventually closing near the day’s low, leaving a small shadow at the bottom of the candle. Longer bodies in the Belt Hold pattern indicate stronger resistance against the trend.
Recognition Criteria
1. The market is characterized by a prevailing uptrend.
2. The market gaps up and opens at its high, and closes near to the low of the day.
3. A long black body that has no upper shadow (a Black Opening Marubozu) is observed.
Pattern Requirements and Flexibility
A Black Opening Marubozu or a Black Marubozu (with no upper or lower shadow) should be seen, and it should open higher than the two preceding white candlesticks.
Trader’s Behavior
The market opens higher with a significant gap, indicating a continuation of the prevailing uptrend. However, after the opening, the market quickly reverses direction. This sudden shift causes concern among bulls, leading them to sell many positions, which could reverse the trend and initiate a sell-off.
Sell/Stop-Loss Levels
The confirmation level is defined as the last close. Prices should cross below this level for confirmation.
The stop loss level is defined as the last high. Following the bearish signal, if prices rise instead of falling, and close or make two consecutive daily highs above the stop loss level, while no bullish pattern is detected, then the stop loss is triggered.