Breakaway Pattern Candlestick

Breakaway Pattern Candlestick Definition

The breakaway pattern occurs in both bull and bear markets. The breakaway pattern consists of five candlesticks, where the current trend is beginning to slow, followed by the filling of an open gap. This pattern usually forecasts the beginning of large counter moves.  The island reversal is the closest candlestick formation to the breakaway pattern, excpet the last candlestick does not create a gap.

Bearish Breakaway Candlestick Charting Example

The bearish breakaway is a rare candlestick pattern. The first candlestick in the formation is a long white (green) candlestick that closes near its high. The second candlestick is a green candlestick that gaps up and the body of the candlestick is in the direction of the trend. The third and fourth candlesticks continue in the direction of the trend, but they have smaller bodies relative to recent candlesticks. The fifth and final candlestick is a long black (red) candlestick that closes inside of the gap between the first and second candle. Traders should wait for the low of the fifth candlestick to be broken prior to taking any short positions.

Bearish Breakaway CandlestickBearish Breakaway Candlestick

Bullish Breakaway Candlestick Charting Example

The bullish breakaway is a rare candlestick pattern. The first candlestick in the formation is a long black (red) candlestick that closes near its low. The second candlestick is a red candlestick that gaps down and the body of the candlestick is in the direction of the trend. The third and fourth candlesticks continue in the direction of the trend, but they have smaller bodies relative to recent candlesticks. The fifth and final candlestick is a long white (green) candlestick that closes inside of the gap between the first and second candle. Traders should wait for the high of the fifth candlestick of the breakaway pattern to be broken prior to taking any long positions.

Bullish Breakaway CandlestickBullish Breakaway Candlestick

 


Tim Ord
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Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

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