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Definition

 

Bearish 4 Gap signals a strong trend reversal. There are gaps between the 4 consecutive days. The last two candles have smaller bodies than the first two, signalling the weakness of the trend.

  • Trend: Reversal
  • Expected trend: Bearish
  • Previous trend: Bullish
  • Reliability: High
  • Type: Bearish
  • Number: 4

Recognition

  • The market is in an upward trend.
  • There are 4 white candles and gaps between each of them.
  • The third and fourth candles’ body is smaller.

Interpretation

This formation in an ascending trend can forecast a reversal with high probability. The decreasing body size of the candles signal the reversal. The gaps between the candles make sure that the short-term increase will exhaust in the long-/medium-term declining trend and a compensation is coming up.

Important factors

The formation requires a confirmation, the appearance of a black candle on the 5th day. The size and the gap of this candle is irrelevant, but the larger the body of the black candle, the more certain the reversal.