A Bearish Belt Hold candlestick pattern is an illustrative way of reflecting Price Action over a given period. It is seen as an indicator that the market trend is turning from being bullish to bearish.
The Bearish Belt Hold pattern is relatively easy to identify.
- It is preceded by an upwards market trend.
- The Bearish Belt Hold candle (with red or black body color according to your preference) must occur after a run of bullish candles.
- The Bearish Belt Hold candle should be relatively larger than the preceding candles.
- It should have a short lower shadow or no shadow at all.
- The opening price is also the high price for the day.
The Bearish Belt Hold candle has a red body which reflects that over that time period the closing price was below the opening price. The short lower shadow shows the closing price was also near to the low of the day.
Bearish Belt Hold candles are a pattern that is relatively easy to spot, and it occurs relatively frequently. You will likely gain more benefit from the pattern by devoting time to gaining an understanding of how to grade the strength of the signal:
- The longer the candle the stronger the signal
- The signal is confirmed by the candle for the subsequent time period also being bearish (as shown in the below chart)
Bearish Belt Hold candlestick patterns are not considered to be the most reliable indicator of future price action.
- Your use of them might be tempered by the fact that even patterns that meet all the above criteria turn out to be incorrect. Testing any strategy based on Bearish Belt Holds is best done in a Demo account or in very small size.
- You may find that using them in conjunction with other indicators does lead to a profitable strategy.
- A Bullish Belt Hold candlestick pattern formed by data taken over longer time periods is considered to offer a more reliable signal on the basis that more market participants have been involved in generating the selling pressure and bring about a downward trend.
Whether you can profit from identifying Bearish Belt Holds is one question. It may be of greater benefit to you to be able to understand what the pattern is trying to say to you about the market.