Japanese candlesticks - Advance block
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Advance block
Definition: An advance block is a structure comprised of three Japanese candlesticks. All three are bullish (green). The first is a large candlestick followed by two others with high wicks and small bodies. The last candlestick takes the form of an inverted hammer.
Illustration:
Characteristic: An advance block often occurs after a significant increase characterized by several large green Japanese candlesticks.
Significance: An advance block is a reversal pattern, it indicates a reversal of the bearish trend. This reflects depletion of the buying power and upcoming profit taking.
Note: The third candlestick is not necessarily an inverted hammer. The important thing is that the bodies of the candlesticks are getting smaller and smaller with large high wicks on the last two. The third candlestick can be an abandoned baby.
Invalidation: If the next candlestick is not bearish or does not open on a bearish gap, the advance block structure is invalidated.
Inverted advance block
Definition: An inverted advance block structure is comprised of three Japanese candlesticks. All three are bearish (red). The first is a large candlestick followed by two others with low wicks and small bodies. The last candlestick takes the form of a hammer.
Illustration:
Characteristic: An inverted advance block often occurs after a significant drop characterized by several large red Japanese candlesticks.
Significance: An inverted advance block is a reversal pattern, it indicates a bullish trend reversal. This reflects depletion of selling power and upcoming profit taking.
Note: The third candlestick is not necessarily a hammer. The important thing is that the bodies of the candlesticks are getting smaller and smaller with long low wicks on the last two. The third candlestick can be a abandoned baby bearish.
Invalidation: If the next candlestick is not bullish or does not open on a bullish gap, the inverted blocked forward structure is invalidated.
