Bearish Counter-Attack Candlestick Pattern

 Bearish Counter-Attack Candlestick Pattern

The bearish counterattack candlestick pattern is a bearish reversal candlestick pattern. A bearish counterattack candlestick pattern can lead to a quick price reversal to the downside.

An uptrend has been underway for some time, and bullish investors are comfortable with the momentum in the stock price. A bearish counterattack candlestick pattern starts with too much of the same, maybe even too much of an anniversary, as price opens with a gap from the close of the previous candlestick pattern. Bullish investors feel good about the gap this morning.

But somewhere in the middle of the trading period, things change. Investors sell shares, and at the end of the trading period, the closing price of the candle is equal to or even slightly lower than the closing price of the previous candle. Hence the naming convention "counterattack".

 

 

How to Use the Counterattack Candlestick Pattern?

 

Recognizing the pattern is one thing. Entering a trade using the identified pattern is a completely different ball game. So, here are some important points to consider before entering a trade based on the Counter Line candlestick pattern.

 

– Watch out for a hard trend first. It can be an uptrend or downtrend.

 

– Once you have identified the trend, look for a candle that opens with a gap up or down. The openings must be consistent with the current trend.

 

– Observe the movement of this candle. The movement of the candle must be in a direction opposite to the prevailing trend.

 

– Once this condition is met, make sure that the candle moving in the opposite direction closes close to the previous day's close.

 

– A pattern can only be called a counter lines candle if it meets all the above conditions.

 

– Once the pattern has been accurately identified, it is advisable to wait for a confirmation candlestick before entering a position. For example, in the case of a bullish counterattack pattern, you should only consider taking a trade if the candle that appears after the pattern is bullish. Otherwise, the bullish reversal is said to have failed.

 

See how the candlestick that appears after the bearish counterattack candlestick pattern is also bearish? This candle essentially confirms the trend reversal and should ideally be the entry point.

 

What does the Bullish Pattern tell Traders?

 

The bullish counterattack candle predicts that the reversal of the current downtrend in the market is imminent. The appearance of the first black candlestick with a long real body indicates that the downward trend of the market will continue. The close of the first candle well below the open lifts the morale of the bears at the expense of the confidence of the bulls. The second candle opens and creates a gap below the close of the previous session. However, the opening of the second candlestick also indicates that the selling pressures and the overall downtrend are easing and the bullish reversal is near. The third or fourth day candles confirm the change in trend.

 

Difference Between Counterattack Lines and an Engulfing Pattern

 

Both patterns are created by candlesticks of the opposite color/direction. The engulfing pattern differs in that the candles are side by side with the true body of the second candle fully engulfing the true body of the first. It is also a reversal pattern.

 

Limitations of Using Counterattack Lines

 

Contour lines may not be reliable. They generally require confirmation candlesticks and are best used in conjunction with other confirmation technical analysis.

 

Candlestick patterns also do not offer profit targets, so there is no indication of the magnitude of the reversal. The pattern may initiate a long-term reversal, or the reversal may be very short-lived.

 

Although the pattern does occur, it is not common. The ways to use this candlestick pattern are limited Read More...

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