Japanese candlesticks - Separating line
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Bullish separating line
Definition: A bullish separating line structure is comprised of two Japanese candlesticks. The first is a large bearish candlestick (red) followed by a bullish candlestick (green) which opens at the same level as the previous candlestick. The two candlesticks can be of different sizes.
Illustration:
Characteristic: A bullish separating line often forms after a significant increase characterized by several large Japanese bullish (green) candlesticks.
Significance: A bullish separating line is a continuation pattern, it indicates a continuation of the bullish movement.
Note: For the structure to be validated, the next candlestick must be bullish and close above the green candlestick’s closing level.
Invalidation: If the lowest point of the bullish candlestick (green) surmounts the next candlestick, the structure can be considered invalidated.
Bearish separating line
Definition: A bearish separating line structure is comprised of two Japanese candlesticks. The first is a large bullish candlestick (green) followed by a bearish candlestick (red) which opens at the same level as the previous candlestick. The two candlesticks can be of different sizes.
Illustration:
Characteristic: A bearish separating line often forms after a significant drop characterized by several large Japanese bearish (red) candlesticks.
Significance: A bearish separating line is a continuation pattern, it indicates a continuation of the bearish movement.
Note: For the structure to be validated, the next candlestick must be bearish and close below the closing level of the red candlestick.
Invalidation: If the highest point of the bearish candlestick (red) surmounts the next candlestick, the structure can be considered invalidated.
