BULLISH TWO RABBITS
Definition
This pattern consists of three candlesticks. The white candlesticks on the second and third days symbolize a bullish momentum, akin to rabbits ready to leap out of their burrow. The Two Rabbits pattern is the bullish counterpart to the Bearish Two Crows pattern.
Recognition Criteria
1. The market is currently defined by a dominant downward trend.
2. A strong black candlestick appears on the first day.
3. The second day is a white candlestick that gaps down.
4. On the final day, another white candlestick emerges, opening within the body of the second day’s candlestick and closing within the body of the first day’s candlestick.
Pattern Requirements and Flexibility
The Bullish Two Rabbits pattern begins with a robust black candlestick. This is followed by a white candlestick that exhibits a downward gap. On the third day, another white candlestick emerges, opening at or below the closing price of the second day, and closing within the body of the first day’s candlestick.
Trader’s Behavior
A downtrend has been ongoing, and the strong black candlestick reinforces the existing bearish sentiment. The following day opens lower with a gap down. Prices rise slightly, forming a short white candlestick. Bears remain unperturbed, as the white candlestick fails to close above the previous day’s close. On the third day, the market opens at or below the second day’s close, but rallies throughout the day to close well within the first day’s candlestick body. This third day’s price action fills the gap from the second day, indicating that bearish momentum is diminishing.
Buy/Stop-Loss Levels
The confirmation level is set at the last closing price. For confirmation, prices need to surpass this level.
The stop-loss level is set at the last low. After a BUY signal, the stop-loss is triggered if prices decline instead of rising and either close below the stop-loss level or record two consecutive daily lows below it, without any bearish pattern being detected.