The price bars often form repeatable patterns on the chart. The traders use them to predict the future price of the underlying asset so they can open trades. Some patterns are more complicated than others. Today, I will explain the pattern that consists of just one candlestick. It is called the Belt Hold. It is also known as yorikiri from the Japanese.
The belt holds a candlestick pattern
The candlestick pattern known as the belt hold is formed by a single Japanese candlestick. It can be found during the uptrend and the downtrend. It provides information about a possible reversal of the current trend.
The belt hold candlestick pattern can be recognized when the candle in different color develops. It can, however, occur quite often on the price chart and thus is not considered to be highly reliable. You should practice for at least a few days to be able to make predictions about trends.
The pattern closes inside the body of the previous candle as if holding the price from moving in the former direction. This is where the name of the pattern comes from.
We can distinguish two types of belt hold pattern. They are bullish and bearish belt holds.
The Belt-Hold candlestick pattern
The bearish belt hold pattern
The bearish belt holds candlestick pattern appears when there is an upward movement on the price chart.
The conditions for the bearish belt hold pattern to be valid are as follows:
- the bearish candlestick appears after several bullish bars;
- the candle’s opening lies higher than the closing of the previous bar. On the intraday chart, the opening price can be similar to the previous closing price;
- the body of the belt hold candle is long, the lower wick is short and there is no upper wick or there is an extremely small one.
The bearish belt hold pattern predicts the trend reversal. It is quite easy to notice in the price chart but keeps in mind that this is a frequent pattern and it should be traded with consideration. Confirm the pattern by looking at the previous candle. It should be a long bullish one. The belt hold bar has to be a long red one. And the candlestick that develops right after should also be bearish to confirm the signal.
The bullish belt holds a candlestick pattern
The bullish belt hold pattern forms when the underlying asset’s price is moving downwards. It suggests that the trend reversal may happen.
It can be identified at any timeframe although it is more substantial on the daily or weekly charts.
How can you find the bullish belt hold pattern?
- There was a downtrend in the market and a bullish candle develops after some bearish candles;
- the opening of this bullish candle lies lower than the closing of the previous bar (or they are similar on the intraday chart);
- the green candle’s body should be long with a small wick on top and no wick at the bottom (or with merely a visible wick).
A bullish belt hold the candlestick on the EUR/USD chart
It is better if the belt hold appears at a resistance level
If you spot a local top that was a belt hold pattern, you can use it in the future as a resistance level. See the picture below. Of course, the same rule applies to local bottoms with belt patterns. They can be used as future support levels.
An existing belt hold can be used in the future to search for price pivots
The belt hold pattern is formed by a single Japanese candlestick. It appears during the upward movement and then it is called a bearish pattern and during the downtrend with the name of a bullish belt hold pattern.
The belt hold is a reversal pattern which means you can expect the price will change direction after its appearance.
This candlestick pattern occurs quite frequently thus reliability is not that high. It is good to use additional technical indicators or other price patterns.
Practice in the Pocket Option demo account. You can observe the development of the pattern and the movement of the price afterward without risking your own money. Once you know how to use the belt hold candlestick pattern in trading, you can switch to the live account.