Squeeze Alert - Candlestick Reversal Pattern

Squeeze Alert Definition

The squeeze alert pattern can occur in both bull and bear markets. This pattern consists of three candlesticks, where one candlestick has a long body, followed by two candlesticks that have smaller high low ranges than the previous bars. The squeeze alert is extremely effective day trading morning reversals.

Bearish Squeeze Alert - Charting Example

The first candlestick in the formation is a long white (green) candlestick that closes near its high with an increase in volume. This candle must be preceded by either a lengthy uptrend, or a large gap up. The second and third candlestick have lower highs and lower lows than the previous candlesticks. This pattern shows that the upside momentum is stalling out. Traders should wait for the low of the second candlestick to be broken prior to taking any short positions.

Bearish Squeeze Alert Chart

Bullish Squeeze Alert - Charting Example

The first candlestick in the formation is a long black (red) candlestick that closes near its low with an increase in volume. This candle must be preceded by either a lengthy downtrend, or a large gap down. The second and third candlestick have lower highs and lower lows than the previous candlesticks. This pattern shows that the downside momentum is stalling out. Traders should wait for the high of the second candlestick in the squeeze alert pattern to be broken prior to taking any long positions.

Bullish Squeeze Alert Chart