The price bars often form repeatable patterns on the chart. The traders use them in order to predict the future price of the underlying asset so they can open profitable trades. Some patterns are more complicated than others. Today, I will explain the pattern that consists of just one candlestick. It is called the Belt Hold. It is also known as yorikiri from Japanese.
|→Belt Hold candlestick patterns are single-candle reversal patterns that can indicate trend changes.|
|→These patterns can be found in both uptrends and downtrends, signaling bullish or bearish reversals.|
|→Though Belt Hold patterns occur frequently, they may not be highly reliable on their own; using additional technical indicators or price patterns is recommended.|
What is a belt hold candlestick pattern?
The candlestick pattern known as the belt hold is formed by a single Japanese candlestick. It can be found during the uptrend and the downtrend. It provides information about a possible reversal of the current trend.
The belt hold candlestick pattern can be recognised when the candle in different colour develops. It can, however, occur quite often on the price chart and thus is not considered to be highly reliable. You should practice for at least a few days to be able to make predictions about trends.
The pattern closes inside the body of the previous candle as if holding price from moving in the former direction. This is where the name of the pattern comes from.
We can distinguish two types of the belt hold pattern. They are bullish and bearish belt holds.
What is bearish belt hold pattern?
The bearish belt hold candlestick pattern appears when there is an upward movement on the price chart.
The conditions for the bearish belt hold pattern to be valid are as follows:
- the bearish candlestick appears after several bullish bars;
- the candle's opening lies higher than the closing of the previous bar. On the intraday chart, the opening price can be similar to the previous closing price;
- the body of the belt hold candle is long, the lower wick is short and there is no upper wick or there is an extremely small one.
The bearish belt hold pattern predicts the trend reversal. It is quite easy to notice in the price chart but keep in mind that this is a frequent pattern and it should be traded with consideration. Confirm the pattern by looking at the previous candle. It should be a long bullish one. The belt hold bar has to be a long red one. And the candlestick that develops right after should also be bearish to confirm the signal.
What is bullish belt hold pattern?
The bullish belt hold pattern forms when the price of the underlying asset is moving downwards. It suggests that the trend reversal may happen.
It can be identified at any timeframe although it is more substantial on the daily or weekly charts.
How can you find the bullish belt hold pattern?
- There was a downtrend in the market and a bullish candle develops after some bearish candles;
- the opening of this bullish candle lies lower than the closing of the previous bar (or they are similar on the intraday chart);
- the green candle's body should be long with a small wick on top and no wick at the bottom (or with merely visible wick).
The strength of the bullish belt hold pattern is bigger when it appears at the support level.
If you spot a local top which was a belt hold pattern, you can use it in the future as a resistance level. See the picture below. Of course, the same rule applies to local bottoms with belt patterns. They can be used as future support levels.
Pros and Cons
- Easy to identify, as it consists of only one candlestick
- Can signal potential trend reversals
- Applicable to various timeframes, but more significant on daily or weekly charts
- Not highly reliable due to its frequent occurrence
- Requires additional confirmation from other technical indicators or price patterns
- Less effective on shorter timeframes
|Bullish Belt Hold||Bearish Belt Hold|
|Occurs during a downtrend||Occurs during an uptrend|
|Signals a potential bullish trend reversal||Signals a potential bearish trend reversal|
|Long green candle with small upper wick and no lower wick||Long red candle with small lower wick and no upper wick|
How reliable is belt hold candle pattern?
The belt hold pattern is formed by a single Japanese candlestick. It appears during the upward movement and then it is called a bearish pattern and during the downtrend with the name of a bullish belt hold pattern.
The belt hold is a reversal pattern which means you can expect the price will change direction after its appearance.
This candlestick pattern occurs quite frequently thus reliability is not that high. It is good to use additional technical indicators or other price patterns.
Practice in the IQ Option demo account. You can observe the development of the pattern and the movement of the price afterwards without risking your own money. Once you know how to use the belt hold candlestick pattern in trading, you can switch to the live account.
- Q: What is the primary purpose of Belt Hold candlestick patterns?
- A: Belt Hold patterns are primarily used to signal potential trend reversals, either bullish or bearish.
- Q: Are Belt Hold patterns equally reliable across all timeframes?
- A: Belt Hold patterns are more significant on daily or weekly charts, and less effective on shorter timeframes.
- Q: Can I rely solely on Belt Hold patterns for my trading decisions?
- A: No, it's recommended to use additional technical indicators or price patterns to confirm Belt Hold patterns before making trading decisions.
- Q: What are the two types of Belt Hold patterns?
- A: The two types are bullish and bearish Belt Hold patterns, found in downtrends and uptrends, respectively.
- Q: How can I improve the reliability of Belt Hold patterns in my trading?
- A: Combining Belt Hold patterns with other technical indicators or price patterns can improve their reliability in predicting trend reversals.
GENERAL RISK WARNING
Kindly note that this article does not provide any investment advice. The information presented regarding past events or potential future developments is solely an opinion and cannot be guaranteed as factual, including the provided examples. We caution readers accordingly.
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