The stick sandwich is one the many secondary candlestick patterns that investors learn about when they learn about trading stock using technical analysis . This pattern can occur in both bull and bear markets and it is comprised of three candlesticks. Of these three candlesticks one candlestick has an opposite colored candlestick on both sides and the closing prices of these two candlesticks surrounding this opposite colored candlestick must be equal. In other words, the closing prices of the two black bodies, in the image above, must be the same, and there is one white candlestick in between these two black candlesticks.

In order for this pattern to occur and to accurately identify it, there is certain criterion that must be met. First, a downtrend has ended and a large black candle is followed by a white candle. Second, the white candle that follows must open above the black candle’s close and it must close above the black candle’s open. Finally, on the last day, the last black candle totally engulfs the white candle and the black candle closes at the same point as the previous black candle.

What does the stick sandwich candlestick pattern indicate is occurring in the markets?
When this pattern occurs the bears have been in control for while and the downtrend is ending. This downtrend is characterized by the last black candle as it is followed by a large white candle. This white candle opens higher than the close of the previous black candle and they continue to reach to higher levels all day, eventually closing at or near the high. What this reversal indicates to traders is that the shorts need protection adding to the buying pressure.  The last day actually opens higher but then trades down for what’s left of the day.

Confirmation of the stick sandwich pattern is required on the fourth day and it may be in the form of a white candlestick, or a large gap up, or a higher close on the fourth day.

Japanese Candlesticks are the fastest way for new investors to quickly and accurately read stock charts. Once you are comfortable with the major candlestick signals, and you have learned how to read stocks charts , continue to expand your expertise by learning the various secondary Candlestick Patterns . Combine these with your favorite technical analysis indicators, such as the moving average , and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or Exchange Traded Funds .

Please continue your candlestick pattern education and read about the Homing Pigeon candlestick.