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Bearish Three Line Strike Candlestick Pattern
Bearish Three Line Strike Candlestick Pattern
Pattern Identification
The bearish three-line strike candlestick pattern is a bearish reversal pattern that occurs at the end of an uptrend. It is made up of four candlesticks.
- First candlestick: A bullish candlestick with a higher close than open.
- Second candlestick: A bullish candlestick with a higher close than open, but with a lower high than the first candlestick.
- Third candlestick: A bullish candlestick with a higher close than open, but with a lower high and lower low than the second candlestick.
- Fourth candlestick: A bearish candlestick with a lower close than open that engulfs the bodies of the first three candlesticks
Trading Strategy
The bearish three-line strike candlestick pattern can be used to trade a potential reversal in an uptrend. The following are some trading strategies that can be used with this pattern.
- Buy stop order: Place a buy stop order above the high of the fourth candlestick. This will enter you into a long position if the price breaks above the resistance level.
- Trailing stop: Once you are in a long position, place a trailing stop below the low of the fourth candlestick. This will help you to protect your profits if the price starts to move against you.
- Target price: Set a target price that is at least 1.5 times the risk you are willing to take. This will help you to lock in profits if the price moves in your favor.
Example
The following chart shows an example of a bearish three-line strike candlestick pattern. The pattern occurs at the end of an uptrend. The first three candlesticks are bullish, with each candlestick closing higher than the previous candlestick. The fourth candlestick is a bearish candlestick that engulfs the bodies of the first three candlesticks.
The trader could place a buy stop order above the high of the fourth candlestick. This would enter the trader into a long position if the price breaks above the resistance level. The trader could also place a trailing stop below the low of the fourth candlestick. This would help the trader to protect their profits if the price starts to move against them. The trader could set a target price that is at least 1.5 times the risk they are willing to take. This would help the trader to lock in profits if the price moves in their favor.
Conclusion
The bearish three-line strike candlestick pattern is a reliable bearish reversal pattern that can be used to trade a potential reversal in an uptrend. The pattern is easy to identify and there are a number of trading strategies that can be used with it. However, it is important to remember that no trading strategy is perfect and there is always the risk of loss.
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