BEARISH UNIQUE THREE MOUNTAIN TOP
Definition
This is a three-candlestick pattern that somewhat looks like the Bearish Evening Star. It appears in an uptrend. The first day’s white candlestick engulfs the following small white body, which characteristically has a long upper shadow. The pattern is completed by a small black body, which closes above the close of the second day.
Recognition Criteria
1. The market is currently characterized by a strong upward trend.
2. A white candlestick is observed on the first day.
3. The second day is a white body that opens lower, trades at a new high, and then closes near the low.
4. The third day is a short black day above the second day.
Pattern Requirements and Flexibility
The Bearish Unique Three Mountain Top pattern begins with a strong white candlestick, followed by a short white candlestick that opens lower. On the second day, the price trades at a new high, resulting in a long upper shadow that surpasses the previous day’s high. The body of this candlestick is engulfed by the first day’s candlestick. The final and third day of the pattern consists of a short black candlestick that remains above the body of the second day.
Trader’s Behavior
The market experiences a surge, resulting in a white candlestick. The following day, the market opens unexpectedly lower, but the bulls demonstrate their strength, pushing the price to new highs during the day. The day closes near its opening price, forming a short white candlestick. This raises questions about the bulls’ strength and indicates market indecision. On the next day, a small black candlestick appears, confirming that the bulls are losing strength.
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 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.