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Stick Sandwich Candlestick Patterns: Definition and Usage

Stick Sandwich Candlestick Pattern in Forex - What it is and how to apply in trading.

This image depicts bullish and bearish stick sandwich candlestick patterns.
Stick Sandwich Candlestick Patterns
Topic: Stick Sandwich

Type: two-way

Trend direction: Reversal

Types of Stick Sandwich Candlestick Patterns

Hello, dear friends. Traditional Japanese candlesticks are a powerful tool for technical analysis in financial markets. They can be used to predict trends, future price movements and identify other important price action patterns. Candlesticks are a popular tool that is frequently used by both beginner and experienced traders, as they are relatively easy to understand and interpret. Especially in fast-moving and highly liquid markets like Forex, Japanese candles are of great importance for shaping trading decisions. One of these candlesticks is the Stick Sandwich candlestick pattern. This pattern is typically seen at the end of an uptrend or downtrend and can signal a possible reversal. There are two types of Stick Sandwich candlestick patterns:

  1. Bearish Stick Sandwich candlestick pattern
  2. Bullish Stick Sandwich candlestick pattern

In this article, we will examine both Stick Sandwich candlestick patterns. We will discuss the definition of this pattern and its use in trading.

1. Bearish Stick Sandwich Candlestick Pattern


Bearish Stick Sandwich is a candlestick formation that occurs within an uptrend and indicates a reversal in the trend. It consists of three candles:

  • First Candle: A long green (bullish) candle representing the current uptrend.
  • Second Candle: A short red (bearish) candle. It opens above the opening price of the first candle and closes below the opening price of the third candle. This indicates a temporary weakness.
  • Third Candle: A long green (bullish) candle. It opens below the closing price of the second candle but fails to reach the closing price of the first candle. This might create an impression that the uptrend continues, but it actually signals a possible change in the trend.

Bearish Stick Sandwich can be interpreted as a sign of fatigue or weakness in an uptrend. The short bearish candle that follows the strong rise in the first candle, followed by another bullish candle, can indicate uncertainty in the trend and a possible reversal.

Trade Positioning

If the Bearish Stick Sandwich forms near a resistance level, the likelihood of a trend reversal is higher. The Bearish Stick Sandwich can create a selling opportunity in uptrends. After seeing the formation, it is best to look for additional confirmation signals to wait for the trend to reverse definitively. Take a look at the trading example in the following L'OREAL stock:

Bearish Stick Sandwich offering a sell signal in L'OREAL stock trading example.
Bearish Stick Sandwich Sell Signal in L'Oréal Stock

Entry: As the Bearish Stick Sandwich pattern is formed at the top of an uptrend, a sell or trend reversal is usually expected after the close of the third candle. When setting an entry level, a break below the third candle or confirmation of the decline by the next candle is expected. Some traders may wait for the break to confirm the continuation of the decline, while others may prefer to enter as soon as the price starts to decline.

Stop Loss: The stop-loss level is usually set outside the trend where the pattern forms. This helps limit possible losses if the trade fails.

Target: The target level can vary depending on how far the downtrend might extend. Some may believe that the decline following the pattern could continue to the size of the previous downward movement. However, in determining the target, other technical analysis tools and market conditions should also be taken into consideration. Additionally, Fibonacci retracement levels, risk/reward ratio, and other technical analysis tools can be utilized.

2. Bullish Stick Sandwich Candlestick Pattern


The Bullish Stick Sandwich is a candlestick pattern that is mostly seen at the bottom of a downtrend. This pattern can signal a trend reversal and consists of three candles.

  • First Candle: This candle forms during a downtrend and is typically a long red or black candle. It represents the current downtrend.
  • Second Candle: This is a short green candle. It opens below the close of the first candle and closes above the open of the third candle. This represents a temporary strength in the trend.
  • Third Candle: This is a long red candle. It opens above the close of the second candle but does not reach the close of the first candle. This can create the illusion that the downtrend is continuing, but this is not the case

The Bullish Stick Sandwich pattern typically occurs at the bottom of a downtrend, when sellers are weakening and buyers are gaining strength. This pattern might be viewed as an early indication of a forthcoming bullish trend.

Trade Positioning

The Bullish Stick Sandwich pattern is more likely to signal a trend reversal if it forms near a support level. This pattern can create a buying opportunity in downtrends. After seeing the formation, it is best to wait for the trend to reverse definitively and to use it in conjunction with other analytical tools. Here is an example of a trade in Deutsche Bank stock:

Bullish Stick Sandwich offering a buy signal in Deutsche Bank stock trading example.
Bullish Stick Sandwich Buy Signal in Deutsche Bank Stock

Entry: When we think that an uptrend will begin in the current trend, we can identify an entry point such as the high of the third candle or the point where the pattern is confirmed and the price starts to move in an upward direction.

Stop Loss: Commonly, a stop-loss is placed below the formation of the pattern or outside the trend. This helps limit possible losses if the trade is unsuccessful.

Target: When setting target levels, it is important to consider other factors such as technical analysis tools and support levels. In addition, it is also important to consider the capacity for the price to rise as much as the pattern formation.

Please don't forget. One point to keep in mind is that no single candlestick pattern constitutes a trading strategy on its own. In technical analysis, it is risky to make a trading decision based on a single pattern. In trading, risk management and decision-making processes are of paramount importance. Formations like Stick Sandwich can be more effective when supported by other indicators and analysis tools.

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