BELT-HOLD LINES

BELT-HOLD LINES

Bullish Belt-Hold Line

The belt-hold is an individual candle line. The bullish belt-hold is a strong white candle that opens on the low of the session (or with a very small lower shadow) and closes at, or near, the ses­sion highs (see Exhibit 4.19). The bullish belt-hold line is also called a white opening shaven bottom. If it is at a low-price area and a long bullish belt-hold appears, it forecasts a rally.

Exhibit 4.19. Bullish Belt-Hold Line

Bearish Belt-Hold Line

The bearish belt-hold (see Exhibit 4.20) is a long black candle that opens on the high of the session (or within a few ticks of the high) and continues lower through the session. If prices are high, the appearance of a bearish belt-hold is a top reversal. The bearish belt-hold line is sometimes called a black opening shaven head.

Exhibit 4.20. Bearish Belt-Hold Line

The longer the height of the belt-hold candle line, the more significant it becomes. The actual Japanese name for the belt­hold is a sumo wrestling term, yorikiri, which means "pushing your opponent out of the ring while holding onto his belt."

A close above a black bearish belt-hold line should mean a resumption of the uptrend. A close under the white bullish belt­hold line implies a renewal of selling pressure.

Belt-hold lines are more important if they confirm resistance or other belt-hold lines or if they have not appeared for a while. In Exhibit 4.21 a bearish engulfing pattern at B indicate poten­tial trouble. The double bearish belt-hold lines came near the same area as this bearish engulfing pattern and as such helped further establish this as an area of supply. Although there were many bearish signals in this short span (the bearish engulfing pattern and the two bearish belt-hold lines), it does not neces­sarily forecast the free fall that occurred after the second belt­hold. This convergence of candle signals increased the likeli­hood of a turn, but not the extent of the following action.

A rising gap in early June soon became a support zone as evi­denced by its successful defense through the first half of June. The June 13 candle was a bullish belt-hold. On the next retest of the window in late July-early August, another series of bullish belt-hold lines formed. These last two bullish belt-hold lines

Exhibit 4.21. Juniper Networks-5 Minutes (Bearish Belt-Hold)

Exhibit 4.22. Redback Networks-Daily (Bullish Belt-Hold)

also served to complete back-to-back piercing patterns. The rally from the early August lows stopped at the August 9 shooting star.