The stick sandwich candlestick pattern is a technical analysis tool used in forex trading to identify potential buy or sell signals in the market. It is believed to have been developed by Japanese rice traders in the 18th century, and has since been widely adopted by traders around the world.
What is the Stick Sandwich Candlestick Pattern?
In the forex market, the stick sandwich pattern is formed when a long black candlestick is followed by a doji (a candlestick with a small body and long wicks on both sides) and then another long black candlestick. This pattern is often seen as a bearish reversal signal, indicating that the market may be turning downward after a period of uptrend.
When using the stick sandwich pattern as a trading strategy, it is important to consider the context in which it appears. This may include looking at the overall trend of the market, as well as any relevant support and resistance levels. Some traders may also use other technical indicators, such as moving averages or oscillators, to confirm the validity of the pattern.
- It is a bearish reversal signal, indicating that the market may be turning downward after a period of uptrend.
- It is formed by three consecutive candlesticks: a long black candlestick, a doji, and another long black candlestick.
- It is important to consider the context in which the pattern appears, including the overall trend of the market and any relevant support and resistance levels.
Stick Sandwich Candlestick Pattern Strategy
Buy Signal
- If the pattern appears after a downtrend, it may indicate that the market is reaching a bottom and is ready to turn upward.
- If the pattern appears near a support level, it may suggest that the market is finding buying interest at that level and is likely to move higher.
- If the pattern is accompanied by other bullish indicators, such as a break above a resistance level or a bullish moving average crossover, it may provide additional confirmation of a potential upward move.
Sell Signal
- The appearance of the pattern after an uptrend could signify that the market is reaching a peak and may soon start to decline.
- If the pattern appears close to a resistance level, it could indicate that the market is experiencing selling pressure at that level and is likely to decrease in value.
- If the pattern is accompanied by other negative signals, like a break below a support level or a bearish moving average crossover, it could offer further confirmation of a potential downward movement.
Benefits of using the Strategy
- Early identification of potential trend reversals, stick sandwich candlestick patterns can provide early warning signs of a potential trend reversal. By identifying and interpreting these patterns, traders can potentially enter or exit positions at more favorable prices.
- Confirmation of other technical indicators, stick sandwich candlestick patterns can provide confirmation of other technical indicators, such as moving averages or oscillators. This can help traders to increase the confidence in their trading decisions and potentially improve their risk management strategies.
- Enhanced visualization of market activity, stick sandwich candlestick charts provide a visual representation of market activity, making it easier for traders to understand price movements and identify patterns. This can help traders to make more informed decisions based on the underlying market dynamics.
Conclusion
The stick sandwich is a candlestick pattern that is formed by three consecutive candlesticks. It is also known as the “Three Black Crows” or “Three White Soldiers” pattern, depending on the direction of the trend.
In the stick sandwich pattern, the first candlestick is a long, bullish (white) or bearish (black) candlestick that is followed by a small, bearish (black) or bullish (white) candlestick. The third candlestick is another long, bullish (white) or bearish (black) candlestick that opens above or below the close of the second candlestick, depending on the direction of the trend.
Here is an example of a stick sandwich pattern in a bearish trend:
The first candlestick is a long black candlestick, which indicates that the bears are in control and pushing the price down, the second candlestick is a small white candlestick, which suggests that the bulls are trying to push the price up, the third candlestick is a long black candlestick that opens below the close of the second candlestick, indicating that the bears have regained control and are pushing the price down again, the stick sandwich pattern is a bearish reversal pattern that indicates that the bears are gaining strength and the bulls are losing control. It is often seen as a sign of a potential trend reversal and may be used by traders as a signal to enter a short position or exit a long position.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.
