Important Stocks To Watch - Breakout Stocks/ Important Developments
The Large Bull Candle Rest And Go Chart Pattern
This candlestick chart pattern is a bullish continuation pattern that signals a strong stock which may move higher. The chart pattern consists of 3 candlesticks. The first one is a large bullish candle which is much larger than the normal green candles found in the stock. The second one is a small bodied candle that stays at the 1/3 top of the large green candle. The 3rd candle is a large green candle which trades above the highs of the first two candles.
The diagram above shows how the chart pattern looks like. True to its name, there is a large candle followed by a small bodied candle which is a red bar or a doji and then another large bull candle.
The first bullish candle shows us that a strong momentum to the upside is present. After the big run up, the second candle appears to give the stock a rest. It is considered a period of rest because the second candle stays at the top 1/3 of the bullish large candle. If it was a correction, the stock will go below the low of the entire green candle.
If you look at the diagram above, you will notice two variations of the chart pattern. The first one is with a small red body and the second one is with a small doji. No matter what candle pattern appears, as long as the price action stays within the top 1/3 of the large bullish candle, then it is considered a period of rest for the stock.
Finally, there will be a break above the second candle. Usually the 3rd candle will be a large bullish candle which continues the spectacular run up that the stock experienced on the first day. At other times, there will be a serious of green bars to the upside.
The chart above is the 60 min chart of QCOM. Notice on the 23rd, the stock had a nice large bullish bar at the opening. Then it had a small bodied candle which is actually a bottoming tail as the second bar. This is considered the resting period after the fast run up.
The stock then broke above the top of the second candle and shot up higher. Although the 3rd bar is not a large green candle, the stock still experienced a nice run up.
That is the power of the Large Bull Candle Rest And Go Chart Pattern.
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