- Sentiment: Bearish
- No. of candles: 3
- Direction: Reversal
What Is The Bearish Stick Sandwich Japanese Candlestick Pattern?
The Bearish Stick Sandwich pattern is a bearish reversal pattern that typically forms at the top of an uptrend.
The Japanese candlestick pattern consists of three candles.
The first and third candles are long white (bullish) candles, and the second candle is a long black (bearish) candle that opens above the first candle’s high and closes below the third candle’s low, effectively sandwiched between the two white candles.
What Is The Psychology Behind The Bearish Stick Sandwich Pattern?
The Bearish Stick Sandwich pattern reflects a potential 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 second black candle, sellers step in and completely overwhelm the buyers, pushing the price back down.
Despite the bearishness of the second candle, the fact that it opens above the first candle’s high and closes above the third candle’s low suggests that the bulls are still present, potentially leading to a false bullish signal.
During the period of the third white candle, buyers attempt to push the price higher, but the selling pressure from the second candle overwhelms the buying pressure, indicating a possible trend reversal.
Japanese Candlestick Charting Techniques, Second Edition
43% OffHow To Trade The Bearish Stick Sandwich Pattern?
To trade the Bearish Stick Sandwich 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 second black candle, confirming the pattern.
Place a stop loss order above the high of the third 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 Stick Sandwich 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.”