Investor Education Story

Financial Indicator

Macroaxis News
  
By Nathan Young

June 22, 2017

When looking for a stalled pattern in the chart, you can be looking during a bull market or a bear market, and the pattern is typically set up after a run over several days.

Stalled Pattern

The stalled pattern is when the market is moving in a direction, typically for a few days. On the candles, the wicks are small but the bodies are large. When a stalled pattern is occurring, the latest candle will have longer wicks, but a smaller body compared to the ones before it, indicating the market is not pushing further as strongly.




If you are looking at a chart and see this formation, it could mean many things, but the most widely believed is the market is beginning to lose steam and the direction could be changing. It is important to look at volume during this process because if the volume levels are changing, that could indicate something as well. When you see this pattern, take note that the opposite force may be taking over for the time being.

Another way of viewing this formation is that the trend is taking a break, but the momentum could continue to the upside. Now you have to be careful with this because it could be a trap, and only a seasoned veteran should try to analyze that. For someone who is new to the game, this would be a great indicator and pattern to use for a trend change.

Before you go live with this, be sure to open a demo account and try it there as this can be used on multiple time frames. If you still have questions, reach out to an investing community and they can help to point you in the right direction. Candlestick patterns are wonderful tools to give you an idea of a market change coming. Just like anything, they are not one hundred percent accurate, but it may give you that little edge to bump your trading to the next level.

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