Hindustan Copper Falling wedge pattern & Bullish kicker

varadtambolkar Updated   
Falling wedge pattern ( black lines ) breakout.

The falling wedge pattern is interpreted as both a bullish continuation and bullish reversal pattern which gives rise to some confusion in the identification of the pattern. Both scenarios contain different market conditions which must be taken into consideration.

The differentiating factor that separates the continuation and reversal pattern is the direction of the trend when the falling wedge appears. A falling wedge is a continuation pattern if it appears in an uptrend and is a reversal pattern when it appears in a downtrend.

Here it is appearing in uptrend. Hence continuation pattern.

Continuation or (Reversal) Pattern:

1.Identify an uptrend or (downtrend)
2.Link lower highs and lower lows using a trend line. The two lines will slope downwards and converge
3.Look for divergence between price and an oscillator like the RSI or stochastic indicator
4.Oversold signal can be confirmed by other technical tools like oscillators
5.Look for break above resistance for a long entry

Key points to remember:

1.Identification of the trend is crucial
2.Both continuation and reversal scenarios are inherently bullish
3.Both patterns present favorable risk to reward ratios as they generally precede big moves

Here is how you identify a bullish kicker:

1.The pattern starts with a bearish (red/black) candle
2.The second candle gaps to the upside, and opens above the previous day’s close. It continues straight up and ends as a bullish candlestick.
3.The gap should not be filled by the wick of the second candlestick, but be left untouched. In other words, the candlestick has a tiny or non-existing lower wick.

The pattern occurs after a downtrend, it instead might be a sign that the market has gone too far, and is about to revert. Here the bullish kicker becomes a sort of reversal pattern.
The first candle in the signal continues with the current trend, moving downward, but then a major event causes the second candle to gap up. The price bursts upward with bullish enthusiasm. Thus, the Bullish Kicker candlestick pattern portrays a strong change in investor opinion. Not only is there a bullish candle following a bearish candle, but the strength of the switch resulted in a gap between the two candles.

The Bullish Kicker signal often occurs after a major surprise in the news that is announced before or after market hours. Something drastic has happened, causing a great shift in investor sentiment, and a reversal will inevitably follow. The larger the gap between the two candles, the more significant the signal.

Combining chart patterns with other technical indicators wave out any false signal if generated. Therefore adding any one of the other indicators like Volume, Stochastic, RSI, MACD support etc. with chart patterns, one can further enhance the probability of the pattern to happen.

Daily chart narrow range.
For long-term view, check out the link attached.


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