This four candlestick pattern starts with a strong white candlestick. The next three days after the upside gap set consecutively higher prices.
However, the last day completely erases the limited price gains of up days and closes inside the gap between the first and second days. This suggests a short term reversal.
How to identify
- 1st day is a long white day.
- 2nd day is a white day whose body gaps up.
- 3rd & 4th days close higher each day.
- 5th day is a long red day that closes inside the gap created by the 1st and 2nd days.
The up trend is accelerated by a gap up. The next few days trend up, however start to run out of steam.
The last day of the pattern shows a breakdown and close below the previous 3 days, however the gap created on the 1st day remains unfilled.
Since the gap is not filled and the trend is obviously deteriorating, this implies the reversal signal.