What is a Thrusting Pattern?

[Jane Goodwin]

[Justin Freeman]

A Thrusting Pattern is taken as a signal of continued downward market movement. It’s a confirmation signal derived from a particular pattern on a candlestick chart. The graphic shows a bearish market. The trend to the downside is being continued by Candlestick 1 and then Candlestick 2 shows a time interval where bulls come back into the market. The key point of the pattern is that Candlestick 2 has a close which is lower than the mid-point of the real body of Candlestick 1. (The strict definition includes the condition that the close of Candlestick 2 is higher than the close of Candlestick 1. If it closes lower than the real body of Candlestick 1 it can be considered the variant: ‘Strong Continuation Thrusting Pattern’). The pattern is showing that bulls stepped into the markets but were ultimately rebuffed. The shadow to the bottom of Candlestick 2 indicates that during the period the down trend was continuing. The signal does of course display a partial trend reversal; the second candlestick is after all green. What those looking to trade to the downside take from the pattern is that the reversal failed. The Thrusting Pattern is not the most reliable of signals. Stepping back for a moment it’s clear to see that there is at least some indication of bulls stepping in. It does certainly highlight an interesting situation but really needs to be considered in conjunction with other indicators. Should candlestick 2 for example be associated with significantly higher trading volumes then this would support the analysis. The extra trading volumes would show that the bullish pressure was significant, they stepped in, in size, but ultimately the bears won. The market consensus has been established through the interaction of a great deal of market participants and indicates that there is more downwards price action to follow.

[Luka Rice]

Hi Jane,

A thrusting pattern refers to a candlestick pattern used when conducting technical analysis. The pattern is created when a long black candle is followed by a white candle.  

Usually, thrusting pattern is a part of the bearish continuation pattern but in some cases, it can also indicate a bullish reversal. That’s why it’s always recommended to confirm the thrusting pattern using other indicators before trading it.  

If it’s the part of a continuation pattern, a black candle that follows the pattern should confirm the prediction and should close below the second line’s opening price. 

On the other hand, if the pattern is followed by a white candle, you may expect a trend reversal. In this instance, the white candle is supposed to close above the first line’s starting price. Otherwise, the candle could break out of a trendline or the closest resistance area. If a higher trading volume follows the candle, that’s a good indicator. 

Even though many consider it a bearish continuation pattern, statistical research has suggested that the thrusting pattern can indicate a bullish reversal.  

Due to the fact that it could go both ways, the traders should be prepared for a breakout in any direction when analyzing the charts. Traders are advised to enter the market only when the breakout direction is confirmed with other technical indicators. 

Another useful thing to do when preparing to trade the thrusting pattern is to use stop-loss orders. Traders can place the order at various places. For instance, if the price breaks above the chart pattern, placing a stop loss under the pattern’s low could be a good idea. Similarly, in case of a downside breakout, traders can put the stop loss above the high of the pattern or above the latest breakout candle. 
 

[Leonel]

Hello Jane,

A thrusting pattern features two candles presented as long lines. Comprising of a black body, the first candlestick occurs in a descent. Contrarily, the second bar is white. It starts under the prior base and ends over its close but underneath its midpoint. This sets it apart from in and on neck illustrations where both candles share a closing level.
A thrusting pattern, therefore, shows bullish efforts to save a diving market. Buyers in the climb are anxious about the unsustainable uptrend. As such, sellers proceed with the descent the following day. Although it’s considered a downward continuation, this technique can also represent a bullish reversal. The direction of the price beyond the pattern isn’t definite making this strategy unreliable for treading breakouts. Seeing price can break anywhere, values above the first candle’s peak hint at a long position while those under the second bar’s bottom indicate a short position.
A stop-loss order is also crucial for this method. For upper breakouts, you can set the stop order beneath the pattern’s low. On the contrary, the area over the pattern’s apex is ideal for stops involving downward breaks.