Belt hold candlestick pattern is formed by an individual candlestick. It could be a bullish candlestick or a bearish candlestick. It is called bullish belt hold candlestick when appears as a bullish candlestick. Correspondingly, it is called bearish belt hold candlestick when appears as a bearish candlestick. Belt hold candlestick is regarded as a reversal pattern, and it’s less powerful than other reversal signals such as dark cloud cover, engulfing patterns etc.
Bullish belt hold candlestick
Bullish belt hold candlestick usually appear in a down trend (even short-term trend) market. It’s a bullish candlestick, and the open price is usually the low price or just little higher than the low price, which means the bullish belt hold candlestick has no shadow or a very short lower shadow. In general, if a long bullish belt hold candlestick appears at the relative low price area, it may indicate a rally.
Bullish belt hold candlestick appears frequently in the market but often mislead traders, so few traders will trade only according to this pattern.
Like some other candlesticks, the length of bullish belt hold candlestick directly affects its power. A long strong bullish belt hold candlestick is more reliable than those small candlesticks.
As said before, the single bullish belt hold candlestick is not so reliable, but once the bullish belt hold candlestick combined with other patterns or methods, things will be much better.
1. Form a bullish engulfing pattern
When the market is in an obvious down trend (even if a short-term trend), the bullish belt hold candlestick engulfs the previous bearish candlestick real body, it forms a bullish engulfing pattern. The reversal smell of this pattern is much stronger than other random candlestick combination.
See the chart below.
Candlestick 1 opened on its low price, it ate the previous bearish candlestick real body and appeared at a down trend, the circled two candlesticks formed a bullish engulfing pattern. The price began to rebound and stopped near the previous resistance area.
The bullish engulfing pattern here has the same characteristic with bullish belt hold candlestick—the longer the bullish candlestick is, the more powerful it will be. Sometimes the bullish belt hold candlestick appears at an important resistance area, it could be an entry signal directly.
Even if the bullish belt hold candlestick in bullish engulfing pattern is long and strong, when the price drops to below the low price of the bullish engulfing pattern, the decline is more likely to come again.
The circled part pattern was a bullish engulfing, and its second candlestick was a bullish belt hold candlestick. The price rebounded and was stopped at the resistance area, it tried to break out the resistance for several times but all failed, so the price chose the minimal resistance direction. It went down and created a new low, a further decline may begin. Although in this example, the latter market went into a range.
2. Form a piercing pattern
Piercing pattern is also a reversal pattern. The first candlestick is a bearish candlestick, while the second candlestick is a long bullish candlestick. This bullish candlestick opens below the low price of bearish candlestick, but it closes above the middle point of the bearish candlestick real body. The bullish belt hold candlestick could also be its bullish candlestick.
The circled pattern was a piercing pattern, and the red 1 labelled candlestick was a bullish belt hold candlestick. It opened on its low price and closed above the previous bearish candlestick real body middle point. This piercing pattern appeared near the previous support area and the bullish belt hold candlestick tested this support. Then the price rebounded and moved up, though it was stopped at the resistance area.
Like the bullish engulfing, when the price down break out the piercing pattern low price, the market is more likely to be back to the down trend.
See the chart below.
The circled pattern was an obvious piercing pattern, and the second candlestick was a bullish belt hold candlestick. They two are the bullish signals, but as the chart shows, the bearish power was too strong. Without any resisting, the price down broke the piercing pattern low price, and later it even came into an accelerated decline.
3. Appear at resistance and support area
Bullish belt hold candlestick may have some chance near the support area. A relative long candlestick may indicate that the decline may come to the end.
The price dropped to the previous high support with a series of small candlesticks, then a bullish belt hold candlestick appeared. Compared with those candlesticks before, it was so long, which showed a strong bullish power. The market turned to a divergence status, and the divergence direction was upwards. Later a long shave head bullish candlestick broke the high resistance and created a new high, which totally confirmed the reversal.
See another chart.
A long bullish belt hold candlestick appeared at the R/S, and it almost engulfed 4 small candlesticks before, the market began to rise again from that day.
As this kind of chart shows, appeared at the R/S relative long bullish belt hold candlestick is usually more reliable and valuable. Many small candlesticks are also bullish belt hold candlesticks, but their bullish power is far less than those long candlesticks. Traders could ignore the small bullish belt hold candlesticks and just focus on the long candlesticks when do the real trading.
Bearish belt hold candlestick
Bearish belt hold candlestick is similar to bullish belt hold candlestick. It’s a relative long bearish candlestick, which opens on the high price or little lower than the high price. When it appears at a relative high price area, it may indicate a decline.
The below chart shows a bearish belt hold candlestick, although it had a very short upper shadow. It appeared at a relative top area, the market reversed and went down further after that.
Similar to the bullish belt hold candlestick, the longer the candlestick is, the more reversal power it has. See the chart below.
The bearish smell of bearish belt hold candlestick 1 was far weaker than bearish belt hold candlestick 2. The length of candlestick 2 was almost twice as candlestick 1, and it engulfed at least 10 small candlesticks, what’s more, it also down broke the important previous low support. Bearish belt hold candlestick 2 has more trading values in the real trading.
Individual bearish belt hold candlestick is not so valuable. Similarly, when it forms some specific candlestick pattern, it could be more reliable.
1. Form a bearish engulfing pattern
Bearish engulfing pattern is similar to bullish engulfing, but the bearish engulfing is a top reversal signal.
Before the circled candlestick appeared, the price was always moving up. The first candlestick in the circle was bullish, while the second candlestick was bearish. The bearish candlestick engulfed the previous bullish candlestick real body, they formed a bearish engulfing pattern. This bearish candlestick opened on its high price, it was a bearish belt hold candlestick actually. The market stopped rising when the bearish engulfing appeared.
If the bearish belt hold candlestick is long enough to engulf several small candlesticks, the reversal smell will be much stronger. The below chart shows a bearish engulfing pattern. The bearish candlestick met the definition of bearish belt hold candlestick, and it engulfed the preceding two small bullish candlesticks real body. In this condition, the reversal pattern was more reliable.
2. Form a dark cloud cover
Dark cloud cover is also a top reversal pattern. It’s opposite with piercing pattern. However, dark cloud cover is not as strict as piercing pattern. The piercing pattern requires that the second candlestick must close above the first candlestick real body middle point.
See the chart below.
Candlestick 1 in the circle has a very short upper shadow, the price went down and closed near its low price. It was a bearish belt hold candlestick. It also opened near the previous bullish candlestick high price, and closed below the middle point of the bullish candlestick real body. They two formed a dark cloud cover pattern.
See another chart.
The circle 1 and 2 were all bearish engulfing patterns, and the circle 3 area was a dark cloud cover pattern. Their bearish candlestick were all bearish belt hold candlesticks.
For circle 2 area, the price tried to borke out the previous high resistance, but it failed and formed a bearish engulfing pattern finally. It was a confirmation to the strong resistance. The bearish candlestick length was far longer than the bullish candlestick, which showed the weakness of bull.
At the circle 3 area, the market tried to break out the resistance caused by bearish engulfing pattern 2. Unfortunately, it failed again. A dark cloud cover pattern formed under the strong selling pressure. The open price of the bearish candlestick was almost the high price of that day, which indicated that the bull did not take charge of anything. It was a strong reversal signal here.
The circle 4 area was also a bearish engulfing pattern, but note that its bearish candlestick was not a bearish belt hold candlestick, the upper shadow was too long.
3. Appear at resistance and support area
In terms of the reliability, candlesticks appears at the R/S area are usually more reliable, bearish belt hold candlestick is no exception.
Candlestick 1 and 2 were all bearish belt hold candlesticks, but their relative location was different. Candlestick 2 appeared near the previous resistance and it was much longer than candlestick 1. It engulfed 3 small candlesticks before. The candlestick 2 was more valuable and significant.
In conclusion, individual belt hold candlestick does not make much sense, its reversal smell is not strong enough. It is usually combined with engulfing pattern, dark cloud cover, piercing pattern and so on in real trading. Traders should care about at least the two things below more:
1. Where does the belt hold candlestick appear? Those near the important resistance and support or trendline, MA and so on are always be worthy of attention.
2. How about the strength of the belt hold candlestick? Usually the longer, the more powerful.