
What is a Stalled candlestick pattern?
A Stalled Candlestick Pattern, also known as a Deliberation Pattern, is a three-candlestick formation that signals a potential reversal in the market. It appears in an uptrend and suggests that bullish momentum is weakening, potentially leading to a price decline.
Formation of the Stalled Pattern
1. First Candlestick A strong bullish candle with a large body, confirming the ongoing uptrend.
2. Second Candlestick Another bullish candle, typically smaller than the first, indicates that buyers are still in control but with reduced strength.
3. Third Candlestick A small-bodied candle (or doji) with a long upper wick, showing hesitation and a potential shift in market sentiment.
Significance
The pattern reflects exhaustion among buyers. While the price continues rising, the diminishing candle size suggests waning demand. Traders may anticipate a downtrend if the next candle confirms the reversal such as a bearish candle or a gap down.
Trading Considerations
Look for confirmation before entering a trade.
Combine with resistance levels or technical indicators like RSI or MACD.
Use stop-loss orders to manage risk.
This pattern helps traders anticipate trend reversals and adjust their strategies accordingly.
Formation of the Stalled Pattern
1. First Candlestick A strong bullish candle with a large body, confirming the ongoing uptrend.
2. Second Candlestick Another bullish candle, typically smaller than the first, indicates that buyers are still in control but with reduced strength.
3. Third Candlestick A small-bodied candle (or doji) with a long upper wick, showing hesitation and a potential shift in market sentiment.
Significance
The pattern reflects exhaustion among buyers. While the price continues rising, the diminishing candle size suggests waning demand. Traders may anticipate a downtrend if the next candle confirms the reversal such as a bearish candle or a gap down.
Trading Considerations
Look for confirmation before entering a trade.
Combine with resistance levels or technical indicators like RSI or MACD.
Use stop-loss orders to manage risk.
This pattern helps traders anticipate trend reversals and adjust their strategies accordingly.
A stalled candlestick pattern is a bearish reversal signal that often appears during an uptrend, indicating a potential trend reversal or slowdown. It consists of three candles: the first is a long bullish candle, followed by a second smaller bullish candle with a higher close, and the third is a small bearish or doji candle that opens near the second candle's close but fails to advance further. This pattern suggests that buying momentum is weakening, and sellers may soon take control. Traders often interpret it as a warning to exit long positions or prepare for a downward move. Confirmation, such as a bearish candle following the pattern, strengthens its reliability. It is commonly used in technical analysis to identify trend exhaustion.
Feb 07, 2025 02:57