Bullish Counterattack Candlestick Patterns: Trading Strategies and More
Bullish Counterattack Candlestick Pattern: Candlestick patterns are a part of technical analysis favored by traders to understand and predict future price movements of securities. Among the various patterns, the Bullish Counterattack pattern is a two-candlestick shape that helps traders spot potential reversals in the security.
In this article, we will discuss what the bullish counter candlestick pattern means, types, and how to set up trades using this pattern.
Bullish Counterattack Candlestick Pattern
The Bullish Counterattack Candlestick pattern is a two candlestick pattern that indicates a possible trend reversal. These two candlestick patterns can appear in an uptrend or a downtrend.
In a bullish reversal candlestick pattern, if the current market price is in a downtrend and the next candlestick opens with a gap lower and closes at the previous candle’s close, it is identified as a bullish reversal.
This indicates that a bearish trend may turn into a bullish one. Here both candles must have the same closing price. However, even if there is a slight difference in the closing price, it can still be considered a bullish reversal pattern.
What a bullish counter candlestick pattern!
In a bullish counter candlestick pattern, the first candle should be bearish (red candle). The second candle should be a bullish candle (green candle) that opened with a lower gap and the closing price should be approximately the same as the previous candle’s closing price. This pattern is best seen after a downtrend.
The second candle here is called a bullish counterattack candle pattern, and when these two candles are formed, the trend may reverse.
Bullish Counterattack Candlestick Pattern – psychology
When the price is in a downward trend, the price opens with a gap due to high selling pressure on the security. But once the gap narrows, prices rise because sellers are unable to maintain pressure. As selling pressure wanes, buyers suddenly enter the security, pushing the price higher. Therefore, the candle closes higher than the opening price.
This indicates that selling pressure is waning and buyers are trying to overcome the selling pressure, which could cause prices to rise.
During a counter-trigger pattern, it is advisable to accompany it with large purchases as it adds confidence to the power of buyers in the market.
Bullish Counterattack Candlestick Pattern – Trading Strategy
The best scenario for this pattern to occur is after a downtrend. To start trading securities after this pattern appears, you must follow these steps:
- entry– The appropriate entry point is to take a buy position just above the close or high price of a bullish candle (green candle). However, if you want a safer entry, take a buy position when the price rises above the opening of the first candle (red candle).
- profit target– You can exit the trade when the price of the security reaches near the immediate resistance area. Once this level is reached, you can also take a partial profit on the trade and hold the remaining position until the next resistance level.
- stop loss– The stop loss should be placed just below the low price of the bullish candle (green candle).
Also read…
Bullish Counterattack Candlestick Pattern – yes
As you can see below, CIPLA LTD. The price reversed upward after forming a bullish counter-trend pattern at the bottom of the downtrend. The trade entry point was higher than the counter-trigger candlestick closing price of Rs. 476 and the stop loss order was Rs. 459.75.
Bullish Counterattack Candlestick Pattern – Key Takeaways
- composition:
In a bullish reversal, the first candlestick is a bearish candlestick and the second candlestick is a bullish candlestick that starts with a bearish gap and closes at the previous candlestick’s closing price.
- mark:
This signals a potential trend reversal as selling pressure is waning and buyers are trying to overcome the selling pressure.
- Volume:
A bullish reversal pattern combined with high rising volume is a strong signal of a potential trend reversal.
- tendency:
The best scenario for this pattern to occur is after a downtrend as the likelihood of a bullish reversal increases.
conclusion
as a result, Bullish Counterattack Candlestick Pattern Even though it does not form often in the market, traders need to know what this pattern means and how to trade it. By utilizing this pattern, traders can get early signs of a trend reversal. However, this pattern should be combined with other indicators to confirm a trend reversal before placing a trade.
Traders are also advised to set an appropriate stop loss to minimize losses if a trade goes against their analysis. What do you think about this pattern? Let us know your thoughts through the comments section.
Written by Praneeth Kadagi
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