Bullish Belt Hold is one of the most popular candlestick patterns. The last candlestick in this candlestick pattern appears after three straight lower lows. It is a powerful bullish candlestick that opens with a gap, forms a new lower low, and then closes within that level. A tiny wick should be present on the candlestick’s top side and none at all on its bottom side for a bullish candlestick.
This candlestick pattern reverses a negative price trend into a positive one. The pattern is mentioned as a “belt hold” because it closes completely inside the previous candle’s body. Thus, it blocks further falls in prices. In commodity trading, the belt-hold pattern typically works. However, due to strong uncertainty, there is a very minimal chance of using the belt hold while trading large currency pairs in forex.
How to find Bullish Belt Hold?
The Bullish Belt Hold, which follows a downtrend, is easy to recognize and extremely frequent. Basically, it represents a single candlestick pattern, but the other three candlesticks are vital for the best trading results. Meanwhile, look for the following indicators to find it:
- The first step is to find three consecutive lower lows made by bearish candlesticks on the chart.
- A bullish candlestick that begins below the low of the previous candlestick and closes inside that candlestick’s range is said to be bullish.
- A bullish candlestick should have a tiny upper side shadow and none at all on the lower side. The range of this candlestick must be much wider than the average of the previous three. The candlestick shouldn’t be a little bullish.
Information Table of Bullish Belt Hold
| Structure | Description |
| Quantity of candlesticks | four |
| Prediction | Reversal of Bullish Trend |
| Prior Trend | Bearish Trend |
| Counter pattern | Bearish Belt Hold |
What can traders learn from bullish belt-hold candles?
You must understand the logic behind developing a price pattern on the chart to trade a Bullish Belt Hold candlestick pattern. You will become more competent in making wise decisions while trading stocks or FX with the aid of this exercise.
The market is currently in a negative trend, as shown by the three bearish bars on the chart. The opening of a new candlestick with a gap beneath the bottom of the previous candlestick shows that sellers have spent their options. Customers will now enter the market because even though it was already oversold, a bearish gap has shown sellers have spent all of their options.
A new Bullish Trend will start if a big Bullish candlestick engulfs the gap and falls inside the previous candlestick’s range. It symbolizes that buyers are now in control of the market and have destroyed the forces of sellers by removing the obstruction they placed.
For this purpose, a bullish belt holding a candlestick pattern should be used to find a bearish trend reversal.
The best way to trade the bullish belt hold pattern
For optimum results, it is usually advised to trade candlestick patterns along with other technical analysis tools. The trading method known as the “bullish belt hold” uses two confluences: the support zone and the Bullish belt hold pattern.
- Find a solid support zone on the price chart, and there is a good chance that the trend will reverse from that zone. To improve the likelihood of a trend reversal, look for a bullish belt holding a candlestick pattern near the support zone. Open a buy trade right away once the candlestick pattern appears.
- Because the purchase order’s stop-loss should be a few pips below the support zone, the safe stop-loss level is below the support zone.
- When an order’s risk-to-reward ratio equals one, the remaining 75 percent of the transaction should be closed. Hold the deal until the risk-reward ratio is 1:2. Use the bullish belt hold candlestick pattern with technical chart patterns to increase risk-reward ratios.
Conclusion
Due to the circumstance that a candlestick pattern works in trends but not in ranges, new dealers are guided not to trade a candlestick pattern unless the technical indicators agree. Despite being a frank chart pattern, the bullish belt hold is unlikely to occur in major currency pairings due to significant volatility and limited chart gaps. However, the bullish belt hold is a high possibility pattern for traders of stocks.
