Definition
Bearish Deliberation is derived from the Bearish Three White Soldiers formation. It signals the exhaustion of the ascending trend, just like the Bearish Advance Block formation did. However, the weakness of the trend becomes clear only on the third day. The small candle body on the third day signals the possibility of the reversal.
- Trend: Reversal
- Expected trend: Bearish
- Previous trend: Bullish
- Reliability: Moderate
- Type: Bearish
- Number: 3
Recognition
- The market is in an upward trend.
- The first and second days are long white candles.
- The share on the second day closes higher.
- The share opens close to the second day’s closing on the third day.
- The third day is a short white candle, a Spinning Top, or a Star with a gap in the trend’s direction.
Interpretation
Bearish Deliberation appears in ascending trends and signals the weakening of such trend. The formation is a sign of the exhaustion of the current trend.
Important factors
The last candle opens with a gap in the trend’s direction. Bearish Deliberation 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.
