Bearish Belt Hold Pattern

by · December 31, 2009

BEARISH BELT HOLD PATTERN (BBHP)
strong reversal that leads to a sell-off

Characteristics:
1. The market is in an overall uptrend;
2. The day gaps up and prices open on their high. But the prices move down closing near its low for the day; and
3. Next, we see a black body distinguished by the absence of the upper shadow (a Black Opening Marubozu).

Brief Explanation:
The BBHP is a single candlestick pattern and is basically a Black Opening Marubozu that occurs in an uptrend. We have a market that is moving up when a significant gap in the direction of trend as the day opens. However, the prices reverse direction and all further price action of the day is the previous trend’s opposite. Such a situation causes concern for the bulls and leads them to sell many positions. This makes the reversal strong and leads into a sell-off.

Note:
1. A confirmation of the trend reversal is necessary (through a black stick, a large gap down or a lower close).