Bearish Seperating Line - Candlestick Continuation Pattern

Bearish Separating Line Definition

A bearish separating line is a bearish continuation pattern.  It is the exact opposite of the bullish separating line.   There are two components to the bearish separating line:

1. The first day is a green candlestick
2. The second day gaps down, opens at the first candlestick's open and closes weakly

The psychology of the setup is the shorts and weak longs jumped off the strong down trend when the green candlestick printed on the chart.  However, this positive development was quickly put to rest as the security gaps lower and closes weakly on the very next bar.

How to Trade Bearish Separating Lines

Bearish separating lines should be traded during a strong downtrend.  Traders should make sure that the two candlesticks in the formation are of a decent size. A short position can be taken after the close of the second candlestick.

Bearish Separating Lines Chart Example