Separating lines bearish

Definition

This pattern occurs during a downtrend. The first day's black candlestick is followed by a white candlestick that opens sharply lower and closes at the same level as the prior sessions close. It is similar to the Piercing Line pattern. However the amount the second day rebounds is different. The Piercing Line?s second day closes above the midpoint of the first day's body while the second day the Bullish Meeting Line closes the same as the first day. Consequently the Piercing Line is a more significant bottom reversal. Nonetheless the Bullish Meeting Line deserves due respect as well.

Recognition Criteria

1. The market is characterized by a prevailing downtrend.
2. On the first day a black candlestick is observed.
3. Then we see a white candlestick on the second day.
4. The closing prices are the same or almost the same on both days.

Pattern Requirements and Flexibility

The Bullish Meeting Line consists of two candlesticks first a black candlestick then a white candlestick; both not short. The closing prices of both days should be the same or almost the same.

Trader?s Behavior

The occurrence of this pattern reflects a stalemate between bulls and bears. The market is in a downtrend when a strong black candlestick is formed which further supports the trend. The next day opens sharply lower causing the bears to feel more confident. Then the bulls start a counterattack pushing prices up and leading to a close equal to (or very close to) the previous close. The downtrend is now breached.

Buy/Stop Loss Levels

The confirmation level is defined as the last close. Prices should cross above this level for confirmation.

The stop loss level is defined as the last low. Following the BUY if prices go down instead of going up and close or make two consecutive daily lows below the stop loss level while no bearish pattern is detected then the stop loss is triggered.