Deliberation Pattern

Deliberation Pattern - Overview

The deliberation pattern can occur in both bull and bear markets. This deliberation pattern consists of three candlesticks that are all the same color. On quick glance, the bearish deliberation pattern resembles the three black crows and the bullish deliberation pattern resembles the three white soldiers formation.

Bearish Deliberation Pattern - Charting Example

The bearish deliberation pattern takes place when a clear uptrend is in place. It is comprised of three white (green) candlesticks. The first two candles have long white bodies and close near their highs. The last candle gaps away from the previous close, but the body of the candle is small relative to the previous two candlesticks. This small body is a sign of indecision on the part of traders over the current uptrend, hence the name bearish deliberation pattern. While the bearish deliberation pattern is classified as a bearish reversal signal, it does not have a high probability of calling market tops. Traders should however use the bearish deliberation pattern as an early sign to lock in profits and or move up protective stops.

Bullish Deliberation Pattern - Charting Example

The bullish deliberation pattern takes place when a clear downtrend is in place. It is comprised of three black (red) candlesticks. The first two candles have long red bodies and close near their lows. The last candle gaps away from the previous close, but the body of the candle is small relative to the previous two candlesticks. This small body is a sign of indecision on the part of traders over the current downtrend, hence the name bullish deliberation pattern. While the bullish deliberation pattern is classified as a bullish reversal signal, it does not have a high probability of calling market bottoms. Traders should however use the bullish deliberation pattern as an early sign to lock in profits and or move up protective stops.

See You At the Top,
mysmp.com