Deliberation Bearish Candlestick Pattern

The candlestick pattern Deliberation Bearish is a trend reversal formation of 3 candles which occurs in uptrends and indicates that there is a probability of a change to a bearish trend. This pattern has an average level of reliability and can be identified as follows:
  • This formation is presented in uptrends.
  • In the first two periods white candles are formed with long real bodies. In the second period, the closing price is higher than the closing price of the first period.
  • The opening of the third candle occurs near the end of the second candle.
  • In the third period we can see a candle with a small real body, usually a shooting star or a spinning top which opens with a gap on the previous candle.
Deliberation Bearish at the end of a Bullish Trend

Pattern Interpretation

Deliberation Bearish pattern is a derivative of Three White Soldiers formation. It is a pattern that points to a similar weakness to that indicated by the Advanced Block, but in a shorter period of time because in this case the weakness is it established implicitly by the third period candlestick. The small body of the third candle of the Deliberation Bearish shows that the upward movement has lost its strength and therefore is likely to occur a change in trend, at least in the short term.

Some analysts say the third candle should close near the second candle to give greater validity to the formation and to increase the probability of a change to a downtrend, however others believe that the greater the gap between the second and third candle, the greater the possibility that a short-term setback occurs. However, if a gap up occurs, it may indicate a continuation of the uptrend (see Rising Windows bullish formation), although the possibility of profit with a possible decrease of price movement should not be overlooked.

This pattern occurs after a strong bullish movement and indicates that the buyers impuls is exhausted, at least temporarily.

Usually the Deliberation Bearish is not a definitive trend change pattern, but rather it points to a possible significant price. It is an important formation in high price levels and may be useful to close long positions, but not to open short positions to try to take advantage of possible changes in market trends.

Confirmation is required to validate the formation, which can come in the form of a black candle, a gap down or a lower close on the fourth candle with respect to the previous candle. Thus, the trend change has an increased reliability.

Real Example of the Pattern