Two candlesticks, the initial of which is bullish and the last of which is bearish, make up a bearish belt hold. The opening candle ought to be bullish and in a rising trend. The second candle should open wide and close at or very close to the conclusion of the first candle.
The bearish belt hold is typically interpreted as an indication that the trend will shortly shift to the downside. In stocks and indices, the belt-hold price pattern typically operates. Due to strong volatility, belt hold patterns in key currency pairings are extremely unlikely to happen.
The appearance of Bearish Belt Hold
On the price chart, the triple bullish candlesticks forming higher highs and higher lows are the indicator of a Bearish Belt Hold. At the top of the price chart, a large bearish candlestick should emerge, reaching a new peak and closing within the previous candlestick’s range. Three bullish candlesticks indicate a bullish trend. Small body sizes on these candlesticks should indicate a gradual upward price trend.
Interpretation of Bearish Belt Hold
The majority of traders often have an optimistic outlook when they trade and anticipate that a security’s price will increase over time. By maintaining this attitude, traders typically create a buying trend that results in the buyers’ dominance of the market.
As a result, as the market attitude turns bullish, the very first candle in the bearish belt-hold forms. The trader, however, becomes concerned when the price rises significantly. The traders’ perspective is altered by their apprehension of losing money if the price somehow drops.
When a trader’s perspective changes, they begin to sell the security in large quantities. As a result, the pattern’s second candle is created. When a trader’s perspective changes, they begin selling the asset in large quantities. Thus, the pattern’s second candle is created.
As traders begin to sell, the candle’s open price increases for that day, signaling that the sellers are now in control of the market. As a consequence, the security closes with little to no wick at the previous day’s closing. Since the seller currently controls the market, there is a potential that the trend will reverse and turn bearish.
Trading Bearish Belt Hold
Candlestick pattern trading always involves the integration of additional technical analysis techniques.
Launch a sell order
The first step is finding a strong supply or resistance zone at the peak of price swings. The likelihood of a price trend reversal from the resistance zone is very high. A trend reversal indicator also includes a bearish belt hold. The likelihood of a price trend reversal will rise when we combine the two indications.
Stop-loss level
Well above the resistance zone is the level at which losses are safe. Because of this, stop-loss orders are always set above the resistance zone. If the bearish candlestick’s high is above the resistance zone, you should opt to set your stop-loss order above the candlestick’s high.
Take Profit Level
Close out 75% of the deal at a risk-to-reward ratio of 1:1. Hold the remainder of the deal until the risk-reward ratio hits 1:2.
Conclusion
Once an upward trend has ended, a bearish belt-hold forms. A red candle is created here, opening at the day’s high and closing at the previous day’s close. Since the open price is the only price that matters, this candle typically has no upper wick. A bearish belt hold reveals a pattern.
Trading, however, cannot be performed and ought not to be done in reliance on one pattern. When a bearish belt hold pattern appears, Traders must always show patience for a few more patterns to appear and only place a trade when they are certain it will.
Trading tactics are never 100 percent secure. One cannot determine the change in trend in the context of a bearish belt hold based solely on one candle. This can result in needless complications. However, you must backtest a strategy once before using it to enter a trade. One of the greatest ways to determine how well your approach will perform in the real market is to backtest it.
