Definition
There is a white candle at the end of the inclining formation, which does not necessarily fill out the gap between the first two candles. The candle is called Bullish Breakaway. It suggests a short-term trend reversal.
- Trend: Reversal
- Expected trend: Bullish
- Previous trend: Bearish
- Reliability: Low
- Type: Bullish
- Number: 5
Recognition
- The market is in a downward trend.
- The first day is a long black candle.
- The second day is also a black candle with a gap in the trend’s direction.
- Bearish behaviour is continued on the third and fourth day. The share always closes on new minimums.
- The fifth day is a long white candle, closing in the gap between the first two candles.
Interpretation
Bullish Breakaway is always formed in inclining trends, representing an oversold market. The first day is a long black candle, followed by three decreasing candles with a downward gap. All the candles apart from the third are black. The colour of the third candle is irrelevant. After the gap, a Three Black Crows pattern is formed (drawing new minimum opening and closing prices). The candles suggest that the inclining trend is going to continue. However, there is a visible deceleration in the trend’s pace. On the last day, there is a significant breakout in the opposite direction of the trend. The candle covers the previous three day’s price movements. The unfilled gap suggests the weakness of the reversal pattern. It is a short-term trend reversal pattern.
Important factors
To make sure the trend is reversed, a confirmation on the sixth day is needed. The confirmation could come from a white candle with an upward gap or a higher closing price.
