- Sentiment: Bullish
- No. of candles: 5
- Direction: Reversal
What Is The Bullish Breakaway Candlestick Pattern?
The Bullish Breakaway pattern is a bullish reversal pattern that typically forms after a downtrend or during a period of market consolidation.
The Japanese candlestick pattern consists of five candles.
The first candle is a bearish candle, followed by three small bullish candles with progressively higher closes.
The fifth and final candle is a long bullish candle that opens above the high of the preceding small candle and closes above the high of the first bearish candle, indicating strong buying pressure and a possible trend reversal.
What Is The Psychology Behind The Bullish Breakaway Pattern?
The Bullish Breakaway pattern reflects a potential shift in market sentiment from bearish to bullish. Initially, the bears are in control, pushing the price lower with the first bearish candle.
However, the appearance of the three small bullish candles suggests that buying pressure is increasing, and the bears are losing their grip.
Finally, the fifth and final candle, which opens above the high of the preceding small candle and closes above the high of the first bearish candle, indicates a potential trend reversal as buyers take control.
Japanese Candlestick Charting Techniques, Second Edition
71% OffHow To Trade The Bullish Breakaway Reversal Pattern?
To trade the Bullish Breakaway pattern, wait for confirmation by a subsequent bullish candle or another technical indicator.
The buy trigger occurs when the price moves and closes above the high of the fifth and final bullish candle, confirming the pattern.
Place a stop loss order below the low of the first bearish candle to protect against potential false breakouts or reversals.
As the price moves in your favor, consider using trailing stops or other risk management techniques to lock in profits and minimize potential losses.
Additional Tips
While the Bullish Breakaway pattern can be a reliable bullish reversal signal, it is essential to use it in conjunction with other technical indicators and chart patterns to confirm the trend change.
Additionally, be aware of the overall market context and consider factors such as support and resistance levels, as well as the strength of the prevailing trend.
Keep in mind that no single pattern can guarantee a trend reversal, and proper risk management is always necessary.
Continue to learn about Japanese candlesticks through books, such as Steve Nison’s “Japanese Candlestick Charting Techniques” and “Beyond Candlesticks.”