Waiting For the Third Day
When first starting out with candlestick charts, it’s important to understand a few basic features about the chart itself. The images placed on the chart are called the candlesticks, and they can be black, white, red, or blue. The body of the candlestick is meant to indicate a range, in this case, the range between the opening and closing prices for a stock on a certain day. Once you learn to interpret the candlesticks themselves, you can start to notice patterns in the chart, like the bearish belt hold, which indicate trends in the movement of the stock..
You can start looking for the bearish belt hold after a significant run of bullish price movements. First, black candlestick occurs indicating a bearish day of trading. Then, you’ll notice that the opening price is higher than the closing of the day before. Finally, you’ll see the price of the stock decline throughout the course of the day, which will result in a long black candlestick that has no upper shadow and only a short lower shadow..
The important thing to remember about candlestick signals like the bearish belt hold is that they are going to make you want to take action immediately, but it’s important to wait for the third day of trading to close before you make your move. Many times this trend will seem to indicate that your stock is about to start a decline, but it’s important to wait to see if that prediction really pans out. More often than not it will just be a hiccup holding things up before the increasing trend continues. Look for it when the day’s opening price is higher than the closing price of the previous day.