Bearish Medium Reliability Candlestick Patterns
1. Bearish Dragonfly Doji 2. Bearish Long legged Doji 3. Bearish Engulfing
4. Bearish Gravestone Doji 5. Bearish Doji Star 6. Bearish Harami Cross
7. Bearish Meeting Lines 8. Bearish Advance Block 9. Bearish Deliberation
10. Bearish
Try Star 11. Bearish
Two Crows 12. Bearish
Breakaway
1. Bearish Dragonfly Doji
Pattern: reversal
Reliability: low/moderate
Identification
A Doji forms at the upper end of a trading range with a long lower shadow (the longer the more bearish) with no, or almost no upper
shadow.
The Psychology
In an uptrend or within a bounce of a downtrend, a sharp intraday sell-off is followed by a reversal which causes the stock to close at its opening price near the day's high. Although the stock recovers from its intraday sell-off, it suggests the bulls are starting to lose strength, and a reversal may occur. A weak following day on solid volume is still needed to confirm the pattern.
The bearish Dragonfly Doji is similar to the bearish Hanging Man, bullish Dragonfly Doji, and bullish Hammer.
In an uptrend or within a bounce of a downtrend, a sharp intraday sell-off is followed by a reversal which causes the stock to close at its opening price near the day's high. Although the stock recovers from its intraday sell-off, it suggests the bulls are starting to lose strength, and a reversal may occur. A weak following day on solid volume is still needed to confirm the pattern.
The bearish Dragonfly Doji is similar to the bearish Hanging Man, bullish Dragonfly Doji, and bullish Hammer.
2. BEARISH LONG LEGGED DOJI
Type:Reversal
Relevance:Bearish
Prior Trend:Bullish
Reliability:Medium
Confirmation:Required
No. of Sticks:1
Characteristics:
1. Overall, market is on an uptrend;
2. There is then a Doji that gaps in the direction of the uptrend;
3. The body of the Doji is either a horizontal line or it is significantly small; and
4. The upper and lower shadows of the Doji are long and are almost of equal length.
Brief Explanation:
The BLLDP is a Doji portrayed by very long shadows. This shows the indecision of the buyers and sellers. It is an important reversal signal. The Long Legged Doji tells us that the prices trade well above and below the opening price. However, they close virtually at the opening price level. The end result is a very little change from the initial open despite the excitement and volatility during the day. The market has lost its sense of direction.
1. The Long Legged Doji is a single candlestick pattern
2. On Day 2, a confirmation in the form of a move opposite to Day 1’s trade is suggested.
3. Bearish Engulfing
Pattern: reversal Reliability: moderate
Identification
A white day is then completely “engulfed” by a large black day which gaps above the white day's high and closes below its low.
The Psychology
In an uptrend or within a bounce of a downtrend, the gap up may be the blow out that causes the shorts to throw in the towel and cover. Meanwhile the smart money is selling and getting short and the selling activity is so intense, the stock closes below the previous day's low. The bullish Engulfing pattern is very common…literally dozens occur every day and many are just incidental. Watch volume for confirmation.
The bearish Engulfing is similar to the bearish Dark Cloud Cover and could be the beginning of the Three Outside Down.
NKE formed a bearish Engulfing pattern at an area of a previous
resistance point. The stock then broke support to confirm the reversal.
You can't expect all trades to work this well; but you can enter and
keep a reasonable stop in place while letting the stock run its course.
DRD formed a bearish Engulfing pattern and broke support on the same day…a nice one-two punch.
4. Bearish Gravestone Doji
BEARISH GRAVESTONE DOJI
| Type: | Reversal |
| Relevance: | Bearish |
| Prior Trend: | Bullish |
| Reliability: | Medium |
| Confirmation: | Suggested |
| No. of Sticks: | 2 |
Definition:
Gravestone Doji is a pattern in which the opening and closing prices are at the low of the day. The Bearish Gravestone Doji Pattern is a top reversal pattern. It appears during an uptrend representing a possible reversal of trend just like its cousin Bearish Shooting Star Pattern.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a white candlestick at the higher end of the trading range in the first day.
3. Prices open with a gap and we see a Doji with no lower (or almost no) shadow on the second day.
4. Upper shadow of the doji is usually long.
2. We see a white candlestick at the higher end of the trading range in the first day.
3. Prices open with a gap and we see a Doji with no lower (or almost no) shadow on the second day.
4. Upper shadow of the doji is usually long.
Explanation:
Gravestone Doji after a rally has bearish implications for the following reason. The market opens on the low of the day. Then prices start to rally (preferably to a new high). The rally cannot be sustained during the day and prices plummet to the day’s lows meaning trouble for longs. The Gravestone Doji represents the graves of those bulls that have died defending their territory.
Important Factors:
The Bearish Gravestone Doji Pattern has more bearish implications than a Bearish Shooting Star Pattern.
The longer the upper shadow and the higher the price level, the more bearish the implications of the Bearish Gravestone Doji Pattern will be.
A confirmation is required on the following day to be more certain about the bearish implications of the Bearish Gravestone Doji Pattern. Confirmation may be in the form of the next day opening below the Gravestone Doji. The larger the gap the stronger the confirmation will be. A black candlestick with lower prices can also be another form of confirmation.
5. Bearish Doji Star
Type:Reversal
Relevance:Bearish
Prior Trend:Bullish
Reliability:Medium
Confirmation:Suggested
No. of Sticks:2
Definition:
2. We see a long white candlestick in the first day.
3. Then we see a Doji that gaps in the direction of the previous trend on the second day.
4. The shadows of the Doji are not long.
A doji following a white candlestick with an upside gap during an uptrend, is the Bearish Doji Star Pattern.
Recognition Criteria:
1. Market is characterized by uptrend.2. We see a long white candlestick in the first day.
3. Then we see a Doji that gaps in the direction of the previous trend on the second day.
4. The shadows of the Doji are not long.
Explanation:
Bulls control the market in a strong uptrend. The appearance of a Bearish Doji Star Pattern in such an uptrend shows that buyers are now losing the control and market is moving to a deadlock between buyers and sellers. This deadlock or balance between buyers and sellers may result because of a diminution in the buying force or an increase in the selling force. Whatever the reason is, the star tells us that the strength of uptrend is now dissipating and the market is increasingly vulnerable to a setback.
Important Factors:
A confirmation on the third day is required to convincingly show that the uptrend has reversed. This confirmation may be in the form of a black candlestick, a large gap down or a lower close on the next trading day.
6. Bearish Harami Cross
| Type: | Reversal |
| Relevance: | Bearish |
| Prior Trend: | Bullish |
| Reliability: | Medium |
| Confirmation: | Recommended |
| No. of Sticks: | 2 |
Definition:
Bearish Harami Cross Pattern is a doji preceded by a long white real body. The Bearish Harami Cross Pattern is a major reversal pattern and is more significant than a regular Bearish Harami Pattern.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a long white candlestick in the first day.
3. Then we see a doji completely engulfed by the real body of the first day on the second day. The shadows (high/low) of this Doji do not have to be contained within the first, though it's preferable if they are.
2. We see a long white candlestick in the first day.
3. Then we see a doji completely engulfed by the real body of the first day on the second day. The shadows (high/low) of this Doji do not have to be contained within the first, though it's preferable if they are.
Explanation:
The Bearish Harami Cross Pattern is a sign of disparity about the market’s health. Market is bullish and strong buying continues as evidenced by the long, white real body but then we see the doji. This shows that the market may not continue in uptrend.
Important Factors:
While the Bearish Harami Pattern is not a major reversal pattern, the Bearish Harami Cross Pattern is a major downside reversal pattern. If a harami cross appears after a long white candlestick, longs should take notice of it since Harami Crosses call tops very effectively.
A confirmation on the third day is required to be sure that the uptrend has reversed. This confirmation may be in the form of a black candlestick, a large gap down or a lower close on the third day.
7. BEARISH MEETING LINES
Type: ReversalRelevance: Bearish
Prior Trend: Bullish
Reliability: Medium
Confirmation: Suggested
No. of Sticks: 2
| Definition:Market may gap up sharply as it opens but it closes unchanged from the prior session’s close during an uptrend. Such a pattern is called Bearish Meeting Lines Pattern, which is a pattern that reflects a balance between the bulls and the bears. Recognition Criteria: 1. Market is characterized by uptrend. 2. We see a long white candlestick in the first day. 3. Then we see a long black candlestick, which has a body that is also higher than the previous trend on the second day. 4. The close of both days is same or almost same. 5. Both of the candlesticks are long but second day candlestick may be shorter than the first. Explanation: The Bearish Meeting Lines Pattern is a top reversal pattern suggesting a stall in uptrend. The first candlestick, a long white one, shows that the bullish momentum is going on. The next day opens higher with a gap but then the bears pull prices down to the prior day’s close. So the initial optimism on the second day’s opening now turns into concern of the longs. Important Factors: The Bearish Meeting Lines Pattern is similar to the Bearish Dark Cloud Cover Pattern. The Dark Cloud Cover has the same two-candlestick pattern. The main difference between the two is the fact that the bearish counterattack line does not usually move into the prior session’s white real body. It just gets back to prior session’s close. The Bearish Dark Cloud Cover Pattern’s second line pushes well into the white real body. So the Dark Cloud Cover Pattern is a more important top reversal signal than the Bearish Meeting Lines Pattern. A confirmation on third day is required to be sure that the uptrend has reversed. This confirmation may be in the form a black candlestick, a large gap down or a lower close on the third day. 8. BEARISH ADVANCE BLOCK Type: ReversalRelevance: Bearish Prior Trend: Bullish Reliability: Medium Confirmation: Suggested No. of Sticks: 3 Definition: It is a pattern characterized by three long white candlesticks with consecutively higher closes during an uptrend. The Bearish Advance Block Pattern is similar to the Bullish Three White Soldiers Pattern. The difference is the fact that each successive day is weaker than the one preceding it. This may suggest that the rally is losing strength and a reversal is possible. Recognition Criteria: 1. Market is characterized by uptrend. 2. We see three adjacent white candlesticks with consecutively higher closes. 3. Each day opens within the previous day's body. 4. Each day’s body is significantly smaller than the body of the previous day. Explanation: If the second and the third candlesticks (particularly the third) show signs of weakening, this means that the rally is losing steam and longs must consider protecting their positions. Longs need especially to be careful about the Bearish Advance Block Pattern during a mature uptrend. Signs of weakening are the progressively smaller white real bodies or the relatively long upper shadows on the latter two white candlesticks. Important Factors: A definite deterioration in the upward strength is evidenced by long upper shadows on the second and third days. The Bearish Advance Block Pattern is not normally a top reversal pattern, but it has the potential to precede a meaningful price decline. This pattern is more important at higher price levels. It suggests to liquidate long positions but it is yet early for short positions. A confirmation of the reversal on the fourth day would provide the needed proof that the uptrend has reversed. A confirmation of the trend reversal by a black candlestick, a large gap down or by a lower close on the next trading day is suggested. 10. BEARISH DELIBERATION Type: ReversalRelevance: Bearish Prior Trend: Bullish Reliability: Medium Confirmation: Suggested No. of Sticks: 3 Definition: The Bearish Deliberation Pattern is a derivative of the Bearish Three White Soldiers Pattern. This pattern also shows a weakness similar to the Bearish Advance Block Pattern since it becomes weaker in a short period of time. However here the weakness occurs all at once on the third day. The small third body of the pattern shows that the rally is losing strength and a reversal is possible. Recognition Criteria: 1. Market is characterized by uptrend. 2. We see long white bodies in the first and second days. 3. The second day has a higher close than the first day. 4. Then the third day opens near the second day's close. 5. The third day is typically a short white candlestick, a spinning top or a star that gaps above the second day. Explanation: The Bearish Deliberation Pattern appears after a sustained upward move and is suggestive of the fact that the rally is losing strength and a reversal is possible. The formation is a proof that the bulls’ strength is at least temporarily exhausted. Important Factors: The last small white candlestick may show a gap away from the long white body, thus becoming a star, or it can be riding on the shoulder of the long white real body. The Bearish Deliberation Pattern is not normally a top reversal pattern but it has potential to precede a meaningful price decline. This pattern is more important at higher price levels. It must be used to liquidate long positions but it is yet too early for short positions. A confirmation on fourth day is required to confirm that the uptrend has reversed. This may be in the form of a black candlestick, a large gap down or a lower close on the fourth day. |
11. BEARISH TRI STAR
Type: ReversalRelevance: Bearish
Prior Trend: Bullish
Reliability: Medium
Confirmation: Suggested
No. of Sticks: 3
Definition:
The Bearish Tri Star Pattern is a very rare but significant top reversal pattern. It is formed by three Dojis. The middle Doji is a Doji Star.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see three Dojis on three consecutive days.
3. The second day Doji has a gap above the first and third.
Explanation:
The Bearish Tri Star Pattern appears in a market characterized by uptrend for a long time. When the trend starts to show weakness, we see smaller real bodies. The first Doji is already a matter of considerable concern. The second Doji shows that market now lost its direction. Finally, the third Doji announces the end of uptrend since this now shows utmost indecision leading to reversal of the positions.
Important Factors:
A confirmation on the fourth day is required to show that the uptrend has reversed. This may be in the form of a black candlestick, a large gap down or a lower close on the fourth day.
12. BEARISH TWO CROWS
Type: Reversal
Relevance: Bearish
Prior Trend: Bullish
Reliability: Medium
Confirmation: Suggested
No. of Sticks: 3
Definition:
During an uptrend we see the market closing lower after an opening gap. Then we see a black day that fills the gap creating the Bearish Two Crows Pattern. It suggests the erosion of the uptrend, and warns about a possible trend reversal.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a long white candlestick in the first day.
3. Then we see a black candlestick on the second day characterized by a gap up.
4. Finally we see a black candlestick whose opening price is inside the body of the second day and which closes inside the body of the first day.
Explanation:
In the Two Crows bear pattern, the market is already in an extended uptrend. We see a gap in the opening of the second day. This higher opening is followed by a lower close in this second day warning that there is some weakness in the rally. The third day also opens at a higher price, but not above the open of the previous day, and then prices go down with a close well within the body of the first day. This third day action fills the gap of the second day. It shows that the bullishness started to erode quickly.
Important Factors:
A confirmation on the fourth day is required to show that the uptrend has reversed. This confirmation may be in the form of a black candlestick, a large gap down or a lower close on the fourth day.
13. BEARISH BREAKAWAY
Type: Reversal
Relevance: Bearish
Prior Trend: Bullish
Reliability: Medium
Confirmation: Recommended
No. of Sticks: 5
Definition:
We see this pattern during an uptrend marked with a bullish surge that eventually weakens. This weakening is illustrated by a long black candlestick that is unable to close the gap into the body of the first day. These events warn us about a short-term reversal.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a long white candlestick in the first day.
3. Then we see a white candlestick with a gap above the first day on the second day.
4. However the third and fourth days continue in the direction of the second day with higher consecutive closes.
5. Finally we see a long black candlestick on the fifth day with a closing price inside the gap caused by the first and second days.
Explanation:
The Bearish Breakaway Pattern is constituted by a gap in the direction of the uptrend followed by three consecutively higher price days. This shows that the trend has suddenly accelerated with a big gap but then it started to fizzle, however it still manages to move in the same direction. There is evidently a slow deterioration of the trend even though the uptrend continues. Finally, we see a burst in the opposite direction completely recovering the previous three days' price action. A possible reversal is also implied by the fact the gap has not been filled. We are now ready for a short-term reversal.
Important Factors:
A confirmation on the sixth day is recommended in the form of a black candlestick, a large gap down or a lower close to be sure that there is indeed a reversal.
