Bearish Advance Block Candlestick Pattern

Bearish advance block is a candlestick trend reversal (or top reversal) pattern which indicate the end of a current uptrend. It is a three candlestick pattern which, at first glance, resembles Bullish Three White Soldiers pattern. But there are two key differences, three white soldiers are formed in downtrends and advance block are formed in up-trends, and in bearish advance block the real-bodies of second and third candlestick are smaller and upper shadow are longer than previous candlestick’s.



The requirements of a bearish advance block candlestick pattern include,

• The pattern should be formed in a significant uptrend.
• All three candlesticks should be bullish (white or colorless) having higher closes than previous day.
• The second and third candlestick should open within the real-body of previous candlestick.
• The real-body of candlestick should be smaller than previous one.
• The upper wick of new candlesticks should be longer than previous one.

The longer upper shadows on second and third days indicate that the bulls are unable to sustain the momentum. Uptrend is getting weaker by day and a reversal is near.

Bearish advance block pattern is considered as a moderately reliable pattern. The pattern is more reliable when the current uptrend has pushed prices to new highs. Further indication of possible trend change should be evident by decrease in trading volume. Confirmation of trend change is suggested which is a bearish/black candlestick, large gap down or a lower close on the next day.

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