How to Trade with Confidence using Meeting Lines and Belt Hold Candle Pattern

MEETING LINES

Counterattack lines

Description

Meeting Lines (Deaisen) in Figure 2.59 or Counterattack Lines (Gyakushu) in Figure 2.60 are formed when opposite colored bodies have the same closing price. The first Candlestick body is the same color as the current trend. The second body is formed by a gap open in the same direction as the trend. However, by the close, it has come back to the previous days close. The bullish Meeting Line has the same criteria as the Piercing Line except that it closes where it closed the previous day and not up into the body. Likewise, the bearish Meeting Line is the same as the Dark Cloud pattern, but it does not close down into the body of the previous day.

Criteria

• The first Candlestick body should continue the prevailing trend.
• The second Candlestick gaps open continuing the trend.
• The real body of the second day closes at the close of the first day.
• The body of the second day is opposite color of the first day.
• Both days should be long candle days.

Signal Enhancements

• The longer the bodies, the more significant the reversal pattern.

Pattern Psychology

After a strong trend has been in effect, the trend is further promoted by a long body day. The exuberance is increased the second day with a gap in the same direction. But before the end of the day, the price has come back to the same closing price of the previous day. This indicates that the other side of the market has now stepped in. Another day, opposite of the predominant trend is required to demonstrate that the trend has reversed. The opposite colored body does not need to be as long as the first body. In every case, a confirmation day is going to be needed. The pattern has more strength if the are no shadows at the meeting point. (See Figure 2.61.)

BELT HOLD

Belt Hold Description

The Belt Hold lines in Figure 2.62 are formed by single Candlesticks. The Bullish Belt Hold is a long white candle that has gapped down in a downtrend. From it's opening point, it moved higher for the rest of the day. This is called a White Opening Shaven Bottom or White Opening Maruboza. The bearish Belt Hold is just the opposite. It is formed with a severe gap away from the existing uptrend. It opens at its high and immediately backs off for the rest of the day. It is known as a Black Opening Shaven head or Black Opening Maruboza. Yorikiri, a sumo wrestling term, means pushing your opponent out of the ring while holding onto his belt. The longer the body of the Belt Hold, the more significant the reversal. (See Figures 2.62 and 2.63.)

Criteria

• The Candlestick body should be the opposite color of the prevailing trend.
• It significantly gaps open, continuing the trend. 
• The real body of the Candlestick has no shadow at the open end. The open is the high or low of that trend.
• The length of the body should be a long body. The greater the length, the more significant the reversal signal.

Signal Enhancements

• The longer the body, the more significant the reversal pattern.

Pattern Psychology

After a strong trend has been in effect, the trend is further promoted by a gap open, usually a large gap. The opening price becomes the point where the price immediately moves back in the direction of the previous close. This makes the opening price the high or the low for the trend. This causes concern. Investors start to cover shorts or selling outright. This starts to accentuate the move, thus reversing the existing trend. (See Figure 2.64.)