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Aug 24, 2011, 11.08 AM IST | Source: Moneycontrol.com

Bearish Separating Line: Bearish Continuation Pattern

Bearish Separating Line is a bearish continuation pattern. It is exact opposite of Bullish Separating Line.

Bearish Separating Line: Bearish Continuation Pattern

Bearish Separating Line is a bearish continuation pattern. It is exactly opposite to Bullish Separating Line. In this pattern, first candle is a white one in a downtrend, followed by lower gap opening next day. Second day candle is a large black one, whose opening level is equal to previous day's opening level. It closes at  lower levels.

Bearish separating lines should be traded during a strong downtrend. Traders should make sure that the two candlesticks in the formation are of a decent size. A short position can be taken after the close of the second candlestick.

Strategy: Short positions can be created post close of second candle. The two candles in this pattern should be of decent size.

 

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