A bearish belt hold is a single candlestick reversal technical analysis pattern that occurs when markets are bullish.
This is a technical analysis pattern that uses Japanese candlesticks. In this case, we start with a rise in prices (bull market) and it tells us that they will begin to fall and we should pay attention.
Thus, if it appears, it could be indicating a change in trend in the markets, in this case downwards. In addition, it is usually accompanied by a candle that we explain below. Of course, we must bear in mind that its reliability is not too high.
Bearish Belt Hold Explained
The starting point is a gap or lack of initial price and a bull market with sharp price increases. Traders watch the situation and take long positions. Once positions are closed, the trend change begins and prices begin to fall.
Now traders change their positions to sell taking advantage of price declines. In other words, it is panic, to a certain extent, that causes a change in trend. We must insist, however, on its low reliability and, therefore, it must be used together with other analyses.
Characteristics of the bearish belt hold
Let’s see some of the most relevant characteristics that allow us to anticipate this change.
- The most important is the market situation, which should be clearly bullish. We must bear in mind that it indicates a change in trend.
- Its figure is similar to that of a Black Marubozu, but it has a small tail (shadow) and, in turn, its neck is black and long. Actually, she looks like a candle, but it would be in an inverted position.
- The session, like the bullish belt hold, starts with a gap. Once the price returns, the market has made the price almost reach its maximum.
- The closing usually occurs with the price close to its minimum value and a Black Marubozu usually appears at the end.
The Black Marubozu
This candlestick is characteristic of markets where there is high selling pressure. She has a compact shape and no tails, being black in color. In turn, we must compare its size with that of the surrounding candles to check the selling force.
If we see this candle when the markets open, it indicates that prices have reached their maximum, but the market has closed at minimum values. It is closely related to the bearish belt hold, since it usually appears at the close of the markets when this situation occurs.