Topping Tail Candlestick Pattern

The topping tail candle pattern deserves it own page and mention because of the immense predictive value that this pattern gives us. Whenever you see a topping tail candle appear, it often points to a reversal. Often times this candle pattern marks the top for the stock.

Being a bearish reversal candle pattern, this pattern offers us a potent signal when it happens at resistance areas.

topping tails

The topping tail can appear in many different forms and variations. Some have a red body indicating it closed lower for the day, some have green body indicating it closed higher than the open. Some have no bodies with the close and open at the low of the day and some with the close and open a little higher than the low of the day.

Don't get confused.

They all have one thing in common. A very very long upper tail. And its very easy to spot them. If you have to take a magnifying glass and zoom into the chart to decide whether it is a topping tail or not then it is not a topping tail. Topping tails should be very easy to spot with the naked eye.

A Powerful Bearish Reversal Signal

The topping tail is indeed a very powerful bearish reversal signal. Whenever you see a topping tail form, you should always be ready for a reversal. If you are holding the stock, you might want to lighten your holding and sell some shares.

The chart above shows INTC forming a topping tail at a resistance area. When topping tails appear near resistance areas, it is a very potent signal for a reversal. Look how much the stock fell in the coming days.

In the chart above, PNR also formed a topping tail at a resistance area. Although the topping tail was not a very clear one, it worked because it was a topping tail with a red body. The stock closed at the low of the day and this signal intense bearish strength. The stock fell the next few days.

In the chart above, YELP formed a very clean topping tail. The stock initially look set for a very bullish run to the upside. But when the topping tail appeared, it told us that we should be very careful. The topping tail proved to be a very good signal to traders. Those who heed the warning would have avoided the severe drop the next couple of weeks.

Works Well In Long Term Charts

The topping tail candlestick pattern is awesome even in weekly charts. As you already know, the weekly charts shows us the trend and moves of a stock from a long term perspective. When you see a weekly topping tail appear, you should take note because it often warns of a bearish crash in the daily charts.

In the chart above, you can see how Citigroup had a very good bullish run in the year 2015. Then, a weekly topping tail appeared. Investors who took the warning that this topping tail gave would have sold some of their shares and avoided the devastating crash the next few weeks.

Similarly, in the chart above, you can see CELG had a nice bull run from June to mid July. Then a weekly topping tail appeared and warned traders of a bearish reversal. The stock had a bearish move the next few weeks and even drop as low as $95 at one point.

  • If you like this article, consider starting the Stock Market Course. It is free and jam packed with great information for newbies.
  • Want to have updates on the financial markets? Join my Telegram Channel. Dstockmarket.com Channel.
  • Help support this page and press the Facebook Like button below. Thanks!

Recent Articles

  1. Technical Analysis Lessons From OKA Corp Stock Chart

    Aug 17, 18 05:07 AM

    In this lesson we will take a look at the technical developments of OKA Corp's stock price and why it moved the way it did. We will also have a look at what might happen to OKA's stock price.

    Read More

  2. Technical Analysis Lessons From BMY Stock Chart

    Aug 16, 18 07:28 AM

    In this lesson, we will learn how and why BMY manage to bottom out and start a new uptrend.

    Read More

  3. Technical Analysis Lessons From Pentamaster's Stock Chart

    Aug 14, 18 08:19 AM

    In this lesson we will learn and examine why Pentamaster was able to recover all of its losses to start a new uptrend and achieve new highs.

    Read More

  4. Technical Analysis Of KLCI August 13 2018

    Aug 13, 18 05:56 AM

    The KLCI is currently at resistance territory after a nice big rally. I would consider a sideways trading a possible scenario at the moment.

    Read More

  5. Technical Analysis Lessons From AAPL's 15 Min Stock Chart

    Aug 13, 18 05:22 AM

    In this lesson, we will learn how AAPL's 15 Min stock chart formation help to send the stock higher for 2-3 days to give traders a nice swing trading opportunity.

    Read More

New! Comments

Have your say about what you just read! Leave me a comment in the box below.