Bearish Breakaway Candlestick Pattern

Bearish breakaway is a bearish trend reversal pattern indicating the end of the existing bullish trend and the start of a new bearish trend (usually for a short-term). It is a 5 candlestick pattern which first indicates the acceleration of current trend, then weakening of the same and finally trend reversal.


The requirements of a bearish breakaway candlestick pattern include,

• The pattern should form in a significant uptrend.
• The first day is characterized by a long bullish (white or colorless) candlestick.
• The second day opens a gap above the first day candlestick (exception: forex charts), marking the acceleration of the trend. But the real-body of the candlestick is smaller than that of first day’s.
• The third and fourth candlesticks are also in the same direction of existing bullish trend with higher closes than previous candlesticks. These candlesticks can be bullish or bearish.
• At fifth trading day, there is a long bearish (black or colored) candlestick which closes in the gap between first and second day candlestick (exception: forex charts; where it should close below second/third day candlestick).

Bearish breakaway candlestick pattern occurs when the bulls fails to continue the trend after the second days opening. The small real-bodies of second, third and fourth days indicate the trend is weakening and the fifth day confirms it. Prices are expected to fall as still the gap is not yet filled.

Bearish breakaway is a moderately reliable candlestick formation. Reliability increases with increase in gap, shortening of real-bodies and trading volume of middle candlesticks, and with increase in volume of fifth bearish candlestick. Confirmation includes a bearish candlestick, a lower close or gap down on six day. Note: The first three days of bearish breakaway candlestick resembles bearish advance block pattern. Bearish advance block is a less reliable pattern and thus traders have to wait for additional confirmation.

NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage