Profitable Candlestick Patterns -Bullish Necklines, Bearish Meeting Lines & bearish Piercing Line
Trend is your friend. But how do you know it is really your friend. Trend can only be your friend if you know that the trend is going to continue or it is about to reverse ahead. Otherwize, trend trading is going to give you a loss. Candlestick patterns can help you anticipate whether a trend is going to continue or reverse ahead. There are many candlestick patterns. Bullish Necklines is one of them. It is a two stick trend confirmation pattern that tells that the trend is expected to continue. There are two type of Neckline Patterns, the In Neck and the Out Neck. When you spot the Bullish Neckline in an uptrend, it is a signal that the trend is expected to continue for sometime.
On the first day, there will be a long bullish candle indicating that heavy buying took place during the day. On the second day or what you call the signal day, there will be a bearish candle that can be long or short with a closing price almost close to the first day. Necklines pattern is a two stick pattern. What this means is that it takes two days on the daily chart for this pattern to form.
Now,there can be two types of Neckline Patterns depending on the closing prices on the signal and the setup days. In case, if the closing price on the first day is little lower than the closing price on the signal day, it is a In Neck Pattern. And if the closing price on the signal day is almost near the closing price on the setup day, it is an On Neck Pattern.
Not much of a difference but you should nevertheless know this difference. Both on neck and in neck pattern tell the same story, so even if you are not able of distinguish between them, doesn’t make much of a difference. When this pattern appears in an uptrend, it means that the uptrend will continue in the future.
Now, let’s talk about a trend reversal candlestick pattern; The Bearish Meeting Line. On the first day or what you call the setup day, you will find a long bullish candle.What this means is that heavy buying took place throughout the day. On the second day or what you call the signal day, you will find a gap opening. This gap entices the sellers to start selling that continues throughout the day. This will result in a long bearish candle on the second or what you call the signal day. This long bearish candle should have a close very near the open of the low of the day as well as the close should be very near to the close on the first or what you call the setup day. This is a Bearish Meeting Line Trend Reversal Pattern. What is means is that the trend is about to reverse itself soon!
Another trend reversal pattern is the Bearish Piercing Ling Pattern. This candlestick pattern is formed when on the first or the setup day, a bullish long candle is formed meaning that the bulls have been in control of the market throughout the day. The second day or what you call the signal day, there will be a bearish candle formed. This means that on the second day or what you call the signal day, the sellers started selling pushing the price action down past the opening price to the midpoint of the first day candle. This bearish candle should have an opening higher than the first day’s high.
This pattern usually occurs in the last stages of an uptrend and when it happens, it means that the trend is about to reverse itself. When this Bearish Piercing Line Candlestick Pattern is formed, it means that the price action has lost it’s momentum.
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