Hello, nowadays it's possible to meet people from all over
the world who are trading in financial markets. The large amounts of money
being exchanged in this global market create a different way of thinking about
trading. It's like there's a huge pie, and all traders want to get their piece
of it. But in order to make money (get your piece of the pie) in financial
markets, you need to correctly guess which way prices will go in the future. Of
course, learning about technical and fundamental analysis can help with that.
One of the tools that people who start trading in the Forex market need to
learn about is Japanese Candlesticks. One of the candlestick patterns is called
the “Belt Hold” candlestick, which is what this article is about. In this
article, we will talk about the following questions:
- What is the Belt Hold Candlestick Pattern?
- What are the main types of the Belt Hold Candlestick Pattern?
- How is the Belt Hold Candlestick pattern formed?
- How to trade with the Belt Hold Candlestick pattern?
Let's go one, two, three...
What is the Belt Hold Candlestick Pattern?
The pattern consisting of a single large-bodied candlestick
is called the Belt Hold Candlestick Pattern. It usually appears at the end of
rising and falling trends. The body of this candlestick is large, often with
little to no shadow, or a very small shadow. When seen on charts, it's
considered a sign of a trend reversal. The Belt Hold Candlestick pattern has
become an essential part of Japanese candlestick analysis method to understand
the structure of price movements and predict future price direction. This
candlestick pattern can form in various timeframes, but in higher timeframes,
especially on the daily timeframe, it's regarded as more reliable.
What are the main types of the Belt Hold Candlestick
pattern?
The Belt Hold candlestick emerges in various ways according
to the current market trend. If this pattern is assumed to provide a
significant reversal signal in the market, it draws attention in both Bear
markets and Bull markets. The Belt Hold candlestick pattern has two main types:
- Bearish Belt Hold Candlestick
- Bullish Belt Hold Candlestick
1️⃣ Bearish Belt Hold Candlestick:
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| Bearish Belt Hold Candlestick |
How does it form?
The Bearish Belt Hold Candlestick, which is a candlestick
pattern that appears during rising trends, is composed of a single candlestick.
It usually stands out by providing a distinct reversal signal in the market.
This is a type of red (black) Marubozu candle, characterized by a kind of large
body, particularly emerging during rising trends, starting from the highest
price levels. It's as if there's a movement in the opposite direction of the
market trend. This movement concludes with a close near the day's lowest level,
creating a small shadow at the bottom of the candlestick. In the Bearish Belt
Hold Candlestick pattern, if the body of the candlestick is longer, it
indicates stronger resistance against the trend. In other words, bears are
showing strong resistance and not allowing prices to rise further.
How to trade?
Market dynamics change rapidly, and the candlestick starts moving unexpectedly in the opposite direction. This sudden reversal creates concern and indecision among buyers, causing many traders to rapidly close their positions. This situation turns the trend towards a decline and triggers widespread selling pressure. Before entering a trade in the market, we must ensure that the Bearish Belt Hold Candlestick pattern forms at the resistance level of the trend. This will be safer. The immediately following candlestick after the large-bodied red candlestick closes should also be in a downtrend. Now, we can place a Sell order. The Stop Loss level is set as the highest price level the bar has reached. We determine the Take Profit level using different technical tools (Fibonacci retracements, support and resistance lines, etc.). Let's take a look at a live example of the Bearish Belt Hold Candlestick Pattern in the market for Advanced Micro Devices (AMD) INC. Stock:
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| The Belt Hold in AMD Inc, stock |
2️⃣ Bullish Belt Hold Candlestick:
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| Bullish Belt Hold Candlestick |
How does it form?
This pattern, consisting of a single candlestick, is
typically known as the green (white) opening Marubozu pattern observed within a
downtrend. Usually, the market opens around the day's lowest level and then
initiates a movement in the opposite direction of the overall market trend.
This movement closes near the day's highest value, creating a small upper
shadow at the top of the candlestick. In the Bullish Belt Hold Candlestick
pattern, if the bodies are longer, it indicates reinforced resistance against
the trend. This signals that the bulls in the market are exhibiting stronger
resistance against the trend and may indicate a potential weakening of the
downtrend or, at least, a slowdown. The Bullish Belt Hold Candlestick Pattern
is an effective tool that reflects emotional reactions in the market and
predicts a certain trend. Despite implying a decrease at first glance, it draws
attention to the potential for a change or at least a slowdown in the course of
the downtrend.
How to trade?
As uncertainty grows in the market, the candlestick starts
moving unexpectedly in a different direction. This situation creates concern
among traders who have opened selling positions, prompting the rapid closure of
many open positions. This, in turn, reverses the trend upwards and initiates a
rising wave led by bullish traders. To open a trade in the market, we first
wait for the close of a large-bodied green candlestick. If prices surpass the
closing level, we can place a Buy order. Typically, we set the Stop Loss level as the lowest point of the last green candlestick. To determine
the Take Profit point, we can use various technical tools, including Fibonacci retracement levels, moving averages, support and resistance lines, among
others. Let's take a look at a live example of the Bullish Belt Hold Candlestick pattern in the market, specifically on Tesla Inc. stock:
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| The Belt Hold in Tesla Inc.stock |