A two-candle bullish pattern where a red candle is followed by a green candle that opens lower and closes above the midpoint of the red body.
Conditions: a downtrend, a solid red candle, then a candle that gaps or opens below the prior low and closes more than halfway up the previous body but not above its open. If it closed above the open it would be a bullish-engulfing instead.
Example: red candle from 80.00 to 78.00. Next candle opens at 77.60 and closes at 79.30, recovering 65% of the prior body. Sellers had the advantage at the open and lost it by the close.
Reliability is moderate and depends on the depth of penetration: the further past the midpoint the close, the stronger the message. In markets that trade 24 hours, the required opening gap rarely appears, so the pattern is mostly a stock and daily-chart phenomenon.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The parts of a candlestick. One candle sums up a slice of time: the thick real body runs from the opening price to the closing price, and the thin wicks reach out to the highest and lowest prices traded. Colour tells you which way the body ran.
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