Definition
The formation consists of three candles with consecutive higher closing prices. The Bearish Advance Block is similar to the Bullish Three White Soldiers, but here the candles are weakening each day. It forecasts the exhaustion of the market and the possibility of an upcoming reversal.
- Trend: Reversal
- Expected trend: Bearish
- Previous trend: Bullish
- Reliability: Moderate
- Type: Bearish
- Number: 3
Recognition
- The market is in an upward trend.
- There are three ascending white candles with higher closing prices each day.
- Every day, the share closes within the body of the previous day and closes close to the daily maximum.
- The body of the candles are shrinking each day.
Interpretation
Due to the increased number of long positions, the maximums are increasing in the ascending trend. Despite the new maximums, the share is closing farther from these maximums every day. This formation reflects the weakening of the trend. The long positions may be sold at this point, but short position should not yet be opened. To make sure the trend is continued, a confirmation is necessary.
Important factors
The shadows on the second and third day signal the weakening of the ascending trend. The Bearish Advance Block does not immediately signal a reversal, it only shows the current trend’s upcoming exhaustion. The long positions may be sold at this point, but short position should not yet be opened. The candle on the fourth day can confirm the reversal. The confirmation could come from a black candle with a downward gap or a lower closing price.
