Experienced traders know that using only one analysis method to understand price movements in the market is not very accurate. Therefore, they attempt to combine fundamental analysis with technical analysis tools. Among the most noteworthy techniques in technical analysis are Japanese Candlesticks. Candlestick patterns provide valuable insights into charts, market psychology, and supply-demand balance. We will examine what the "Advance Block" candlestick pattern is, how it is defined, and how it can be used in this article. We will also take a look at real market examples. Let's get started.
- Topic: Advance Block
- Type: Reversal
- Trend direction: Bearish
- Opposite pattern: Descent Block
What is the Advance Block Candlestick Pattern
The Advance Block candlestick pattern is a triple candle formation that appears during an upward price move. It shows that buying strength begins to fade. The rise continues, but it loses depth and pace. Following this pattern, the price will experience either a pullback or a complete trend reversal. Either way, the signal points toward the beginning of a downtrend.
This structure consists of three consecutive bullish candles. Each candle closes higher than the previous one. However, the body size shrinks step by step. Upper wicks often grow longer as the pattern develops. Price still moves upward, but the pace slows down. Buyers continue to push higher, yet each attempt achieves less progress. Sellers do not reverse the move right away, but their presence becomes harder to ignore.
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| Advance Block Pattern |
This pattern does not announce an immediate decline. It warns that the existing rise may struggle to continue at the same speed. Extra confirmation from later candles becomes important after this formation appears.
Why the Pattern Carries the Name Advance Block
The name is built from two words that describe what happens on the chart. Each word reflects a different part of the same story.
The word "Advance" refers to direction, not strength. Price continues to move higher across several candles. New highs still appear, which keeps the upward path intact.
The word "Block" explains the change inside that rise. Each new candle gains less ground than the one before it. Progress starts to stack on itself instead of expanding. This block is not a visible barrier on the chart. It is a gradual loss of space between opens and closes. Upper wicks often stretch higher, yet bodies fail to follow.
Together, the two words describe an advance that cannot fully extend. Price moves forward, but each step feels heavier than the last. The name reflects this slow tightening rather than a sudden shift.
How Each Candle Shapes the Advance Block
The Advance Block unfolds one candle at a time. This formation develops step by step rather than all at once. Each candle shows a part of the changes during an upward move. Distance between opens and closes, spaces between candles, and the length of wicks reveal how the climb evolves. Small shifts hint when the rise is starting to slow. The sequence itself displays the pattern's development without sudden jumps or reversals.
The First Candlestick Reflects an Active Rise
The first candle belongs to an existing upward move. It shows a green or white body with a solid distance between open and close. Buyers still dominate at this stage. Price advances with ease and leaves little doubt about direction. Upper wicks, if present, stay modest and do not interrupt the move. This candle sets the baseline. It represents the strength that later candles struggle to match.
The Second Candlestick Shows Slower Progress
The second candle also closes higher than the first. Its body remains green or white, though a red body can appear at times. The opening price sits inside the body range of the previous candle. The close moves above the prior close, yet the body does not expand as much.
Upper wicks often become more visible here. Price reaches higher levels but fails to hold the same distance by the close. The rise continues, though it starts to feel restrained.
The Third Candlestick Reveals Growing Difficulty
The third candle usually shows a green or white body, yet red appears occasionally. Its open forms inside the body range of the second candle. The close still rises above the previous one. The body shrinks or stays narrow. Upper wicks stretch higher while the close does not reach the same heights as before.
This candle finishes the sequence. Price keeps moving upward, but each step adds less ground than the one before. The pattern ends without a sudden drop, leaving a sense of upward effort that is fading.
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| Various Types of Advance Block |
After all three candles form, the upward move no longer feels effortless. Each step seems to take more effort than the one before. The sequence displays gradual strain rather than abrupt reversal. Price still climbs, but the distance covered by each candle shrinks. Upper wicks often stretch higher while bodies fail to keep the same pace. The pattern suggests that the rise could stall soon, as the push toward higher levels becomes harder to sustain.
How to Act When an Advance Block Appears
Price moves do not continue upward forever. Small signs in candle formation indicate when a rise may struggle. The Advance Block candlestick pattern forex provides a method to plan a trading strategy. Each candle shows how buyers and sellers interact, giving insight for planned entries and exits.
The trade usually begins after the third candle finishes. This candle signals that the upward push is weakening. A sell order can be placed below the low of the third candle. Stop-loss should sit above its wick. The target often lies near the opening price of the first candle. This approach keeps the position measured while following the natural clues of the pattern. Waiting for the candlestick pattern to fully form is our first step. The formation is not complete until the closing of the third candlestick, so we need to be patient. Afterward, we consider identifying the confirmation level and applying stop-loss and take-profit orders. The confirmation level is determined as the midpoint or the opening point of the last green (or white) body, and for the formation to be confirmed, prices need to break below this level.
Charts make the strategy easier to follow. A daily Coca-Cola stock chart shows a bullish trend ending with an Advance Block candlestick pattern. A reversal followed, the sell order went below the third candle, the stop-loss above the wick, and the target near the opening of the first candle. Visual examples show how this strategy can play out in real trading.
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| Advance Block Pattern on Coca-Cola chart |
This chart shows the Advance Block pattern forming on the Coca-Cola Company stock. The first candle climbs steadily, the second pushes higher but with a shorter body, and the third barely reaches the previous high. A reversal follows, suggesting the uptrend may take a step back and a retracement could occur.
When setting the stop-loss level, we should choose the higher of the two highest prices from the last two days. Placing our stop-loss just above the peak of the third candlestick in the formation will help us avoid being stopped out prematurely if the uptrend continues, while also providing a safety margin against a sudden reversal.
When determining the take-profit points, the low of the first candlestick that forms the pattern is often chosen as the target. Additionally, using support and resistance levels, trend lines, and Fibonacci tools would be a more reasonable option. Let's also give an example image from the real market. The following image presents an example of trading with the Advance Block candlestick pattern in Taiwan Semiconductor Manufacturing Company Ltd. Stock:
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| Bearish Advance Block Candlesticks on TSMC stock chart |
This Advance block candlestick pattern chart captures a moment where the Taiwan Semiconductor stock hesitates near its recent highs. The candles seem to pause as if the market is taking a breath, hinting at a short retracement ahead. The pattern forms a subtle rhythm that is easy to notice once you watch the chart closely. It provides a visual glimpse into how upward trends can slow, offering insight without any sudden changes.
Bearish Reversal with the Advance Block Candlestick Pattern
This Advance Block candlestick pattern chart on the SP 500 Index shows the market reaching a peak where upward movement starts to struggle. The first candle surges from its open to close near the top, setting a confident pace. The second candle climbs too, but its gain is smaller, hinting that the upward push is weakening. The third candle makes only a timid advance, signaling that bullish strength is fading and a shift may be approaching.
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| Advance Block Candlesticks on the SP 500 Index chart |
This Advance Block candlestick pattern chart highlights how the upward move can stall and a bearish reversal may occur. The sequence of candles shows shrinking gains and compact bodies, signaling hesitation among buyers. Each opening and closing level on the chart adds to the story, making it easy to follow how the pattern develops. Overall, this Advance Block candlestick pattern chart demonstrates how a strong uptrend can slow down and prepare the ground for a downward shift.
Note. Although there are some similarities between the Advance Block candlestick pattern and the Three White Soldiers candlestick pattern, they are never the same. There are significant differences between the patterns. Specifically, the Three White Soldiers consists of rising candles with filled bodies, indicating a continuation of an uptrend. On the other hand, in the Advance Block pattern, the second and third candlesticks start inside the body of the previous candlestick, and the third candlestick has the longest shadow. The most striking difference is that this pattern is considered a temporary retracement or a reversal formation.
Information. The opposite of the Advance Block candlestick pattern is the Descent Block candlestick pattern.
Advance Block FAQs
This section gathers the most common questions about the Advance Block and provides straightforward answers. It serves as a quick guide for traders who want to explore the topic without getting lost or confused.