Candlestick Charting For Dummies, 2nd Edition

Chapter 8

Using Bearish Double-Stick Patterns

IN THIS CHAPTER

Working with bearish double-stick patterns that signal a trend reversal

Predicting the continuation of a downtrend by using bearish double-stick patterns

In Chapter 7, I discuss the nature and usefulness of bullish double-stick patterns, but they aren’t the only double-stick show in town. As with most bullish patterns, bearish two-day counterparts exist, and you should know how to recognize and trade them because these patterns work as effective sell signals. When a sell signal pops up, even if you don’t have a long position on, you can use the opportunity to initiate a successful short position.

Like the bullish patterns in Chapter 7, the bearish double-stick patterns in this chapter may appear as reversal patterns (signaling that an uptrend is coming to an end) or as continuation patterns (telling you that a prevailing downtrend will continue). These bearish examples have two parts: the first day, which I refer to as the setup day, and the second day, which I call the signal day.

Understanding Bearish Reversal Patterns

I’m definitely biased toward bearish reversal patterns. I’ve always been a bit of a countertrend ...