Definition - As a single candlestick, the bullish belt hold can be seen in a downtrend and is essentially a White Opening Marubozu. After starting on the lowest point of the day, a rally goes against the overall trend which then stops towards the high; on top of the candle, a small shadow can be found. The longer the body of the Belt Hold, the stronger the resistance will be against the trend.
- After opening at the low point of the day, it will close towards the high of the day.
- A prevailing downtrend has to be in place.
- Much like a White Opening Marubozu, the long white body will have no lower shadow.
Patterns and Flexibility
In a bullish belt hold, there will be no lower shadow and it could even be that there is also no upper shadow. Also, the two preceding black candlesticks must be higher than the opening price.
Behaviour of Trader
After opening, there will be a gap towards the prevailing downtrend so the first impression is that the downtrend will continue. However, this soon changes after the market opens because traders will see a move in the opposite direction. For short-term traders, this brings concern and many look to cover their positions which, in turn, has the potential to reverse and rally for the bulls.
Buy/Stop Loss Levels - For there to be confirmation, the prices must cross the last closing price which is used as a confirmation level. Generally, the last low will be the stop loss level. If prices start to fall following the buy, the stop loss will be triggered if no bearish pattern can be seen. Also, traders should look for two consecutive daily lows that sit beneath the stop loss level.