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?
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.
This pattern indicates a slowdown in the
current trend. When traders observe it, it often suggests that the leading side
(buyers or sellers) is weakening, and a turning point may be approaching.
Types of the Stalled (Deliberation) Candlestick Pattern
There are two main types of this pattern:
- Bearish Stalled (Deliberation)
- Bullish Stalled (Deliberation)
These two variations reflect opposite market conditions. The Bearish Stalled pattern signals a possible reversal at the peak of an uptrend, showing that buyers are losing strength. On the other hand, the Bullish Stalled pattern appears near the bottom of a downtrend, suggesting that selling pressure is fading and an upward reversal may be forming. The following illustration shows both patterns in a clear and easy-to-understand format:
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| The Stalled (or Deliberation) candlestick patterns |
1. Bearish Stalled (Deliberation) Candlestick Pattern
The Bearish Stalled pattern forms during an uptrend and warns that the buyers' power is weakening. Put differently, it turns the uptrend into a downtrend. Therefore, it is referred to as the Bearish Stalled or Bearish Deliberation candlestick pattern. It consists of three green candles with each candle smaller than the previous one.
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.When this pattern appears near a resistance level, it often means the uptrend is slowing down. If the next candle is bearish, it confirms a reversal to the downside.
2. Bullish Stalled (Deliberation) Candlestick Pattern
The Bullish Stalled pattern forms near the end of a downtrend, showing that sellers are getting weaker. Alternatively stated, the downtrend changes into an uptrend. This is why this pattern is called Bullish Stalled or Bullish Deliberation. It also consists of three red candles, each smaller than the one before it.
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.When this pattern appears near a support zone, it is a strong warning that downward pressure is weakening. A bullish candle appearing next can confirm the start of an uptrend.
How to Trade Stalled (Deliberation) Candlestick Patterns?
The Stalled (Deliberation) candlestick pattern is a subtle yet powerful signal that can help traders spot possible trend reversals. It doesn't always indicate an immediate reversal, but it shows that the previous trend is losing momentum and traders are starting to act more cautiously. By understanding how the pattern forms and what it represents, traders can make more informed entry and exit decisions in both bullish and bearish markets.
Observing this pattern can help traders adjust their positions, avoid entering at the wrong time, or take profits before the market shifts. Both the bullish and bearish versions of this pattern provide hints about where the market might move next, making it a practical tool for planning trades. By paying attention to the formation of these candles, traders can gain a better sense of market behavior and make decisions with more confidence.
Bearish Stalled Trading
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 |
Bullish Stalled Trading
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 |
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.
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.