Thursday, June 16, 2016

What is Breakaway Pattern: Bearish Reversal Pattern?

What is Breakaway Pattern: Bearish Reversal Pattern?


Breakaway Pattern is a bearish reversal pattern. It consists of 5 candles. In this pattern, the current trend is seen beginning to slow and then filling of the gap is seen. First candle in this formation is a long white candle, which closes near its high. Second candle is a white candle, which gaps up. Third and fourth candles continue in the direction of the current trend and have smaller bodies. Fifth candle is a long black candle, closing inside the gap between first and second candle.

A reversal is confirmed in the form of black candle or a large gap down on sixth day.

Strategy: Short positions can be taken once low of the fifth candle is broken.