Meeting Lines

Meeting Lines Candlestick Pattern

The bearish meeting lines candlestick pattern is formed when opposite colored bodies have    the same closing price. This pattern reflects a balance between the bulls and the bears and is similar to the dark cloud cover , except that it does not close down into the body of the previous day.  There are three criteria required for this bearish reversal pattern to occur. First, the first candlestick body should continue the current trend. Second, the trend should continue with the second body formed by a gap in the same direction. Third, on the second day, the real body closes at the previous day’s close, and the body of the second day is the opposite color of the first day. Finally, both days should be long candle days but the opposite colored body does not need to be as long as the first body. The longer the bodies of these candles the more significant the reversal pattern.

What does this pattern indicate is occurring in the markets?
The bearish meetings lines pattern occurs when the market gaps up sharply as it opens but it then closes at the previous day’s close during an uptrend. This means that on the first day a long white candle indicates a bullish market and it is increased the following day with a gap in the same direction. Before the end of the second day however, the bears step in and are able to pull prices back down to the previous day’s close. Again, this pattern reflects a balance between the bulls and the bears.

Confirmation for the meeting lines pattern is required on the third day to ensure that the uptrend has in fact reversed. Confirmation can be in the form of a large gap down, a lower close, or a black candlestick on the third day. This pattern also has more strength if there are no shadows at the meeting point. Additionally, this reversal pattern has the same criteria as the candlestick piercing pattern , except that it does not close up into the body, but instead closes at the same close as the previous day.

Japanese Candlesticks , such as the meeting lines reversal pattern, are the fastest way for new investors to quickly and accurately read stock charts. Once you are comfortable with the major candlestick signals, 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 Belt Hold Candlestick Pattern.