Abandoned Baby
Advance Block
Belt Hold
Dark Cloud Cover
Doji Star
Dragonfly Doji
Downside Gap Three Methods
Downside Tasuki Gap
Evening Doji Star
Evening Star
Falling Three Methods
Gravestone Doji
Hanging Man
Harami Cross
Identical Three Crows
In Neck
Meeting Lines
On Neck
Separating Lines
Shooting Star
Side By Side White Lines
Three Black Crows
Three Inside Down
Three Line Strike
Three Outside Down
Tri Star
Two Crows
Upside Gap Two Crows

print this page
send to a friend

Pattern: reversal
Reliability: moderate

A long white day is followed by a second long white day that closes higher than the first. The third white day gaps above the second and becomes a white spinning top or Doji.

The Psychology
The first two white days say “full speed ahead” as the stock appears strong and in a solid uptrend. But the gap up and failure to rally much suggests that the strength may be waning. This isn't necessarily bearish, but it's certainly less bullish, so stops are raised, or profits taken on long positions.

The bearish Deliberation is similar to the bullish Three White Soldiers and bearish Advance Block and could be the beginning of the bearish Evening Star.

Deliberation formations are not for the light of heart because you are essentially shorting a strong stock. Here you can see AT&T rally strongly on high volume. The third white day (which was small) hinted that the buyers may be getting tired. A good trader would wait until the next day to short the gap down at the open…or the pattern could simply be used as an exit strategy for an existing long position.

Again, it's hard to short a stock as strong as VXGN was in this bearish Deliberation pattern, but its formation could offer an exit strategy if you are long.

» back to top