Business, Legal & Accounting Glossary
The Bearish Belt Hold is a candlestick pattern that forms during an upward trend. The 2-day Bearish Belt Hold pattern starts following a stretch of bullish days. Day 1 is bullish but is followed on Day 2 by a bearish candlestick. The opening price, which becomes the high for day 2, is higher than the close of the previous day. The stock price declines throughout the day, resulting in a long bearish candlestick with a short lower shadow and no upper shadow.
The bearish belt hold is a candlestick charting pattern that tends to signal the reversal of an uptrend. A single long black candlestick with no upper shadow and a small lower shadow (i.e. black opening Marubozu) characterizes the bearish belt hold pattern. The bearish belt hold occurs following a series of up days when the bearish belt hold candle gaps up to open at the high of the day, then falls to close near the low. The gap up of the bearish belt hold candle initially suggests a continuation of the uptrend until sellers come in and push the price down. Bulls lightening their positions in response to the weakening price contribute to the downward move that forms a bearish belt hold candle. The long body of the bearish belt hold candle implies increasing resistance to the prevailing trend. Traders believe the longer the bearish belt hold candle’s body, the more reliable the signal. However, traders also consider the reliability of the bearish belt hold to be low in general. Downward trading activity on subsequent days is required to confirm the reversal signalled by the bearish belt hold. The counterpart to the bearish belt hold is the bullish belt hold.
The Bearish Belt Hold often signals a reversal in investor sentiment from bullish to bearish. However, it is not considered very reliable as it occurs frequently and is often incorrect in predicting future share prices. As with any other candlestick charting method, more than two days of trading should be considered when making predictions about trends.
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This glossary post was last updated: 23rd March, 2020 | 6 Views.