BEARISH DESCENDING HAWK
Definition
This pattern features a small white candlestick enclosed within a preceding, relatively longer white candlestick. It resembles the Harami pattern, but with both candlesticks being white.
Recognition Criteria
1. The market is currently defined by a dominant upward trend.
2. On the first day a white candlestick is observed.
3. On the second day, a white candlestick appears, which is fully engulfed by the larger white candlestick from the first day.
Pattern Requirements and Flexibility
The Bearish Descending Hawk pattern consists of two white candlesticks. The first day’s white candlestick, either normal or long, completely engulfs the smaller white candlestick on the following day. The tops or bottoms of the bodies of the two candlesticks can be at the same level, but the body of the second candlestick should always be smaller than the first.
Trader’s Behavior
This pattern signals a disparity. In an uptrend market, the first day’s white candlestick indicates heavy buying activity. However, the smaller candlestick that appears on the second day signifies diminished buying power and enthusiasm, suggesting a potential trend reversal.
Sell/Stop-Loss Levels
The confirmation level is determined as the lower of either the last closing price or the midpoint of the previous white candlestick. For confirmation, prices should move below this level.
The stop-loss level is defined as the higher of the last two highs. Following the bearish signal, if prices rise instead of falling and either close above or make two consecutive daily highs above the stop-loss level, without detecting any bullish pattern, the stop-loss is triggered.