Bearish Belt Hold Candlestick Pattern


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Definition

The trend reversal candlestick pattern Bearish Belt Hold is a form of trend reversal that transforms the bullish price trend into a bearish price trend . It forms at the top price chart and creates a long bearish candlestick, which results in a price trend reverse.

Because of the high volatility, the belt-hold price pattern works well in stocks and indices. However, there is very little chance of a belt hold pattern in major currency pairs.

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How do I identify a bearish-belt hold?

These steps will show you how to spot a bearish Belt Hold Pattern on the price charts.

  1. Three bullish candlesticks are expected to make higher highs and lower lows in the price chart.
  2. A large bearish candlestick with a new high should be found at the top price chart. It should close within the range from the previous candlestick.
  3. Three bullish candlesticks signify bullish trends. These candlesticks should not have large bodies as they indicate slow upward price trends.

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The third point does not have to be taken for the belt holding pattern to work. It is used for identifying slow market trends. Because market reversals occur after a false breakout, overbought or oversold situations. These three candlesticks increase chances of trend reversal.

Bearish Belt hold: Information Table

Features Explanation
Number of Candlesticks 4
Prediction Bearish trend reversal
Prior Trend Bullish trend
Counter Pattern Bullish Belt Hold

What does a bearish pattern of a hold pattern tell traders about the market?

It is mandatory to know the reason for each candlestick formation you intend to trade. If you only know that belt hold is a reversal pattern, you won’t make the right trading decisions.

Because market conditions are not always ideal, there will be a variety of price patterns. You must be able to comprehend the logic behind every price pattern to deal with this situation.

Three candlesticks within the bearish Belt Hold Pattern signify that buyers control the market but are becoming weaker over time, and sellers are looking to sell. But after three consecutive bullish candlesticks it opens with a gap then engulfs it.

This gap is falsely called a breakout and captures the orders made by the buyers. The gap was closed by the price, and it closed within the same range as the previous bar.

Buyers were defeated. After an engulfment at a critical level, sellers started a new bearish tendency and now control the market. What does the bearish belt pattern reveal to traders? It is mandatory to know the reason for each candlestick pattern you trade.

Trading will not be easy if all you know is that belt hold can be described as a reversal pattern. Because the real market is not like ideal price patterns.

You need to understand the logic behind every price pattern to deal with this situation. Three candlesticks for the bearish Belt Hold Pattern show that buyers are still controlling the market, however, they are getting weaker over time and sellers may be preparing to sell.

However, after three consecutive bullish candlesticks, a huge bearish candlestick opens with an opening and then engulfs that gap. This false breakout is an order capture of the buyers.

Price filled the gap and closed within a range of the prior bar, defeating the buyers. After an important level of engulfment, sellers began a new bearish trend that is now dominating the market.

How to trade the bearish belt hold

Trades in candlestick patterns are always made with the help of other technical analysis tools. I will demonstrate how to trade bearish hold efficiently.
This strategy includes two confluences

  • Resistance or Supply Zone
  • Bearish belt hold

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Open sell trade

Look for a strong resistance zone or supply area at the top of price swings. It is possible for the price trend to reverse from the resistance zone.

The trend reversal signal for bearish belt hold is also present. The probability of price trend reverse will increase if we combine the indicators.

Open a Sell Trade immediately after the Bearish Belt has formed.

Stop-loss level

The safe level of stop-loss is higher than the resistance zone. Stop-loss should be placed above the resistance area. If the high of a bearish candlestick is greater than the resistance zone, you can place a stop-loss higher than the candlestick.

Take-profit Level

Close 75% trades at 1:1 risk-reward. Next, hold on to the remaining trades until they reach 1:2 risk-reward.

Conclusion

This candlestick pattern is best when the following conditions are met. It is not a good idea to trade one candlestick pattern without considering other technical parameters like overbought conditions or oversold conditions.

Because the price structure is natural. Price patterns have their ups, downs. The best thing to do is analyze the price swings of the chart and then trade according to confluences, such as bearish belt-hold patterns.


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