Candlestick Charting For Dummies, 2nd Edition

Chapter 10

Trading with Bearish Three-Stick Patterns

IN THIS CHAPTER

Predicting a trend reversal with bearish three-stick patterns

Working with bearish three-stick patterns that signal a continued downtrend

In this chapter, I focus on the biggest bearish formations included in this book: the three-stick bearish candlestick patterns. Three-stick patterns are pretty complex and also rare, but definitely powerful. Throughout the next few pages, I cover some of the most common bearish three-stick patterns that pop up in your charts.

If you turn back to Chapter 9, you can read about a variety of bullish three-stick patterns that can tell you when a downtrend is about to shift upward, as well as a few of those patterns that reveal when a downtrend will continue. This chapter features the bearish counterparts of those patterns, which can reveal when an uptrend is about to fall apart and head downward or when a downtrend is likely to continue. Use these patterns when you’re looking to put on a short position or as sell signals if you’ve already established a long position.

Understanding Bearish Three-Stick Trend Reversal Patterns

Much like their bullish counterparts from Chapter 9, a host of three-day bullish patterns commonly indicate that a trend reversal is forthcoming. The patterns ...