- Sentiment: Bearish
- No. of candles: 5
- Direction: Reversal
What Is The Bearish Breakaway Candlestick Pattern?
The Bearish Breakaway pattern is a bearish reversal pattern that occurs during an uptrend.
The Japanese candlestick pattern consists of five candles.
The first candle is a long white (bullish) candle, followed by a series of small real body candles (either bullish or bearish) that gap up from the previous candle.
The last candle is a long black (bearish) candle that gaps down from the previous candle, signaling a potential trend reversal.
What Is The Psychology Behind The Bearish Breakaway Pattern?
The Bearish Breakaway pattern reflects a shift in market sentiment from bullish to bearish. During the period of the first white candle, buyers are in control and push the price higher.
However, during the period of the small real body candles that follow, the buying pressure wanes, indicating indecision in the market.
The last candle is a long black candle that opens below the previous candle’s low and continues to move lower, indicating a strong bearish sentiment and potential trend reversal.
Japanese Candlestick Charting Techniques, Second Edition
71% OffHow To Trade The Bearish Breakaway Reversal Pattern?
To trade the Bearish Breakaway pattern, wait for confirmation by a subsequent bearish candle or another technical indicator.
The sell trigger occurs when the price moves and closes below the low of the last black candle, confirming the pattern.
Place a stop loss order above the high of the first white 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 Bearish Breakaway pattern can be a reliable bearish 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.”