Side-by-Side White Lines and Separating Lines Candlestick Patterns

SIDE-BY-SIDE WHITE LINES

Description

Side-by-Side White Lines are found in uptrends. Two white candles form side- by-side after gapping up from the previous white candle. Narabi in Japanese means "in a row." Narabi aka means "whites in a row," Side-by-Side Lines, black or white, indicate a pause or stalemate when they are observed by themselves. In this case, they have a different meaning because they occur after a gap in the trend's direction. (See Figure 3.15.)

Criteria

• An uptrend is in progress. A gap occurs between two candles of the same color.
• The color of the first two candles is the same as the prevailing trend.
• The third day, a candle opens at the same or near the open price of the previous day.
• The third day closes near the close of the previous day.

Pattern Psychology

During an uptrend, a white candle gaps up from the white candle of the previous day. The next day opens at the open of the gap up; yet, it persists in maintaining the upward move again. This indicates that the bears were making a try to turn the trend around, but lost to the bulls almost immediately. These patterns are somewhat rare, but at least you will know what is happening when you see this formation. (See Figure 3.16.)

The bearish Side-by-Side Line pattern is more rare than the bullish Side- by-Side. It represents short covering occurring. When the sellers step in again, more short covering occurs. Finally when the short covering is over, the downtrend continues.

SEPARATING LINES

Description

Iki chigai sen is defined as "lines that move in opposite directions." The market is in an uptrend when there is a pull-back, exhibited by a long black candle, as seen in Figure 3.17. However, the next day opens back up at the level that it opened the prior day. The Separating Line Pattern has the same open and is the opposite colors. This is the exact reverse of the Meeting Line Pattern. In other Japanese circles, this is also known as Furiwake or Dividing Lines.

Criteria

• An uptrend is in progress. Then a day occurs that is the opposite color of the current trend.
• The second day opens at the open of the previous day.
• The second day, should open on its low for the day and proceed to go higher.

Pattern Psychology

During the uptrend, a black body occurs. This causes some concern to the bulls. But the next day the prices gap back up to the previous day's open. This gives the bulls confidence that the trend still has life in it. They jump back in and move prices higher. Confidence is renewed and the trend continues. The bearish Separating Line works the exact same way in the opposite direction. (See Figure 3.18.)