Dear friends, Financial trading is an indispensable part of every trader's life. Markets offer tremendous opportunities but are also filled with complexity and variability. To succeed in this challenging environment, it requires great attention and accurate analysis. This is where Japanese candlestick patterns come into play, shining a light on our trading path. Today, I have examined the "Stalled (or Deliberation)" candlestick pattern in all its aspects for you.
- Topic: Stalled - Deliberation
- Type: two-way
- Trend direction: Reversal
What is the Stalled (Deliberation) candlestick pattern
and how many types are there?
The Stalled (also known as Deliberation) candlestick pattern is a reversal signal pattern in the trend. It can appear in both bullish and bearish trends. It is usually seen at the end of a trend and while it can signal a retracement in some cases, in most cases it indicates a reversal. There are two types of the Stalled (or Deliberation) candlestick pattern:
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| The Stalled (or Deliberation) candlestick patterns |
1.Bearish Stalled (or Deliberation)
candlestick pattern
The Bearish Stalled candlestick pattern appears in an
uptrend, indicating a trend reversal. In other words, it turns the uptrend into
a downtrend. Therefore, it is referred to as the Bearish Stalled (or Bearish
Deliberation) candlestick pattern.
2.Bullish Stalled (or Deliberation) candlestick pattern
The Bullish Stalled candlestick pattern, on the other hand, appears in a downtrend, indicating a reversal. In other words, the downtrend changes into an uptrend. This is why this pattern is called Bullish Stalled (or Bullish Deliberation).
How does the Stalled (Deliberation) candlestick pattern
form?
The Stalled (or Deliberation) candlestick pattern consists
of three candles. This structure represents the end of the trend in which it
forms. The bearish and bullish types of the Stalled (or Deliberation)
candlestick patterns have different structures and appearances. Let's now
examine them together:
The Bearish Stalled (or Bearish Deliberation) candlestick
pattern, occurring in an uptrend, consists of three green candlesticks. The
first candlestick is a long bullish candle. The second candlestick is similar
but closes above the close of the first candle. The second candle's body length
can sometimes be equal to the first candle's body length, or it can be smaller.
The third candle is a smaller green candle, closing above the close of the
second candle. In this way, the pattern is identified by progressively smaller
candles in appearance. The Bearish Stalled pattern indicates the end of an
uptrend and can mark the beginning of a downtrend.
The Bullish Stalled (or BullishDeliberation) candlestick
pattern is seen towards the ends of a downtrend and consists of three red
candlesticks. Similarly, the first red candle is in a downtrend with a long
body. The second candle follows this downtrend and closes lower. The third
candle is very small and red in color. This shrinking indicates nearing the end
of the downtrend and signals the beginning of an uptrend.
Additional
Information 1: The Bearish Stalled (or Deliberation) candlestick pattern
can be confused with the Advanced Block candlestick pattern due to their visual
similarities. However, their main differences are as follows: In the Bearish
Stalled (or Deliberation) candlestick pattern, the candles are consistently
green and sometimes the first candle is equal to the second candle. In
contrast, in the Advanced Block candlestick pattern, the second and third
candles can be of any color, and the second candle's body is always smaller
than the first candle's body.
Additional Information 2: There are visual
similarities between the Bullish Stalled (or Deliberation) candlestick pattern
and the Descent Block candlestick pattern. Therefore, traders may overlook
their basic differences. The candles in the Bullish Stalled (or Deliberation)
pattern are generally red, and sometimes the first candle may be equal to the
second candle. On the other hand, in the Descent Block candlestick pattern, the
second and third candles can be of any color. The second candle's body must be smaller
than the first candle's body.
How to trade using the Stalled (Deliberation) candlestick
pattern?
When the Bearish Stalled (or Bearish Deliberation)
candlestick pattern is observed, we receive a signal that the uptrend will halt
and a reversal will occur. If this pattern forms near a resistance level, its
reliability increases. After confirmation with trend following indicators, we
may consider opening a short position.
- Sell (Short): A sell order can be placed when a confirmation candle with a closing price below the third candle is formed.
- Stop Loss: A stop-loss order can be placed slightly above the third candle's high or resistance level.
- Target: If you do not have a strategy for determining your profit target, you can use Fibonacci tools.
In the chart below for the Chinese Yuan/Japanese Yen
currency pair, there is a trading example involving the Bearish Stalled (Bearish
Deliberation) candlestick pattern:
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| Bearish Stalled-Deliberation in CNH/JPY chart |
The Bullish Stalled (or Bullish Deliberation) candlestick
pattern appears towards the ends of a downtrend, signaling that the price is
likely to rise soon. If this pattern is seen near a support level, it may be
considered a more reliable bullish signal. However, attention should also be
paid to signals from other technical indicators.
- Long (Buy): If a confirming bullish candle forms above the closing price of the third candle, a buy order can be placed.
- Stop Loss: The stop-loss order can be placed slightly below the lowest level of the third candle or slightly below the support level.
- Target: If you don't have a method to determine your profit target, you can use risk-reward ratios.
You can take a look at a trading example involving the
Bullish Stalled (Deliberation) candlestick pattern in the 4-hour chart of the
Australian Dollar/New Zealand Dollar currency pair below:
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| Bullish Stalled-Deliberation in AUD/NZD chart |
Never Forget: The Forex market is risky due to
unexpected fluctuations and sudden changes. All candlestick patterns, including
the Stalled (Deliberation) pattern, carry a margin of error when used alone.
Therefore, it is recommended to use this pattern along with other technical
analysis tools and indicators. Additionally, considering fundamental analysis
will enhance the safety of your trading decisions.