Bearish Breakaway
When the bearish breakaway completes the upward trend reverses and price breaks out downward.
Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 63% of the time
Look for 5 candle lines in an upward price trend with the first candle being a tall white one. The second day should be a white candle with a gap between the two bodies, but the shadows can overlap. Day three should have a higher close and the candle can be any color. Day 4 shows a white candle with a higher close. The last day is a tall black candle with a close within the gap between the bodies of the first two candles.
Construction:
First candle: a tall white candle
Second candle:
a white candle
candle opens above the previous closing price (upward price gap, shadows can overlap)
Third candle
a white or black candle
candle opens above the previous opening price
Fourth candle
a white candle
candle closes above the previous closing price
Fifth candle
a tall black candle
candle opens below the previous closing price
candle closes below the second line's opening price and above the first line's closing price
the price gap formed between the first and the second line is not closed.
In this tutorial about bearish breakaway candlestick patterns this video focuses on a daily chart where in each candlestick details a single day's trading this is most important for online trading. Let's start, bearish breakaway this for candlestick pattern starts with a strong white candlestick the next three days after the upside gap set consecutively higher prices. However, the last day completely erases the limited price gains of up days and closes inside the gap between the first and second days.
This suggests a short-term reversal. How to identify, one...first day is a long white day, two...second day is a white day whose body gaps up, three...third and fourth days close higher each day, four... fifth day is a long red day that closes inside the gap created by the first and second days.
Psychology, the uptrend is accelerated by a gap up the next few days trend up, however, start to run out of steam the last day of the pattern shows a breakdown and closed below the previous three days. However, the gap created on the first day remains unfilled since the gap is not filled in the trend is obviously deteriorating this implies the reversal signal.
