BEARISH THREE
LINE STRIKE
| Type: | Continuation |
| Relevance: | Bearish |
| Prior Trend: | Bearish |
| Reliability: | Low |
| Confirmation: | Definitely required |
| No. of Sticks: | 4 |
This pattern is characterized by three adjacent black and long candlesticks terminated by a white candlestick driving prices back to the point where they were at the beginning of the pattern. If there was a strong bearish trend before the pattern, then it should continue.
Recognition Criteria:
1. Market is characterized by downtrend.2. We see three long black candlesticks with consecutively lower closes.
3. Then we see a white candlestick on the fourth day opening at a lower level and closing above the open of the pattern’s first day.
Explanation:
The Bearish Three Line Strike Pattern appears during a downtrend as evidenced by the three black candlesticks. We see an opening on the fourth day that opens in the direction of the downtrend, but now shorts start covering their positions causing the prices to move strongly in the opposite direction. This may lead to doubts about market direction. However it is also a fact that this move completely eradicated the move of the previous three days. So this day should be looked upon as a day that gave the shorts the chance of being covered and if the bearish trend was strong before the pattern, the downward move should continue.
Important Factors:
A confirmation on the fifth day in the form of a black candlestick, a large gap down or a lower close is definitely required.