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Today I am going to describe a candlestick pattern with the funny name Stick Sandwich pattern. Traders may use different chart types on the IQ Option. Candlestick chart, however, is the most popular one. It is useful for most strategies and you can observe some repeatable patterns on it. These patterns help in determining the future movements of the price.
Key Takeaways🔑
| →The Stick Sandwich pattern is a helpful tool for predicting future price movements. |
| →This pattern can be identified during both uptrends and downtrends, making it versatile for various market conditions. |
| →Always combine the Stick Sandwich pattern with other technical analysis methods for more accurate trading decisions. |
What is the Stick Sandwich trading pattern?
The name of this candlestick pattern comes from the fact that it resembles a sandwich on the price chart. It is formed by three consecutive candles. The middle one has a different colour from the candles surrounding it and a smaller trading range.
The pattern may appear during the downtrend and the uptrend and so it is called a bullish or a bearish Stick Sandwich. Below you will find diagrams of the bullish and bearish versions of the deal. It is very important that the formation is preceded by a trend movement. This, by the way, is important in virtually all candlestick formations.
A bullish Stick Sandwich pattern
A bullish Stick Sandwich can be found at the end of the downtrend. The candles in the pattern should be successively red green red. The middle green candle should have a smaller body. The body represents the range of the opening and closing price. Candles before and after this candle totally engulf it. This is what a bullish Stick Sandwich candlestick pattern looks like.
The second candle of the pattern shows that the selling pressure may be coming to an end soon and the trend may reverse. Wait with the opening of your position when the price breaks through the level of the third candle's high.
A bearish Stick Sandwich pattern
In opposition, the bearish Stick Sandwich should be looked for during the uptrend. A green, red and green candle creates the pattern. The middle candle is red and comparatively smaller.
The bearish Stick Sandwich reveals diminishing buying pressure in the market. The price will probably fall soon. Enter the trade when the candle breaks below the third candle's low. See the EURUSD example below. Outside candles have longer bodies than the middle one.
Pros and Cons of the Stick Sandwich Pattern 📈📉
- ✅ Pros:
- Easy to spot on a candlestick chart.
- Useful for predicting potential trend reversals.
- Applicable in both uptrends and downtrends.
- ❌ Cons:
- Not always a reliable indicator on its own.
- May generate false signals.
- Requires confirmation from other technical analysis tools.
| Stick Sandwich Pattern during Uptrends | Stick Sandwich Pattern during Downtrends |
|---|---|
| Indicates a potential trend reversal to a downtrend. | Indicates a potential trend reversal to an uptrend. |
| Pattern consists of a green, red, and green candle. | Pattern consists of a red, green, and red candle. |
| Middle candle (red) is smaller than the outer green candles. | Middle candle (green) is smaller than the outer red candles. |
Summary
Candlestick patterns are commonly used in the traders' world. Not all have the same reliability and thus, it might be a good idea not to rely just on them. Apply some additional methods of technical analysis to confirm the best moments to enter or exit the trade.
The Stick Sandwich is the pattern of three consecutive candles where the middle one is smaller than the other two and has a different colour. The pattern can be found during the downtrend and the uptrend. The setup itself works better if you identify it at a significant level of support or resistance, or at an important average, such as the EMA200.
As always, I recommend you begin with the IQ Option demo account. It is free of charge and supplied with virtual cash. This way you can train and practice different scenarios without risking you losing your capital. Go there and find the Stick Sandwich on the candlestick chart.
We have already discussed many candlestick formations on IQ Option Wiki. If you are missing any or would like to learn more about any of them, please visit the comments section below the article.
Good luck!!
Short Q&A 💡
- Q: What is the Stick Sandwich pattern?
- A: The Stick Sandwich pattern is a candlestick pattern that consists of three consecutive candles, with the middle candle having a different color and smaller trading range than the surrounding candles. It can help predict potential trend reversals.
- Q: Can the Stick Sandwich pattern be used in both uptrends and downtrends?
- A: Yes, the Stick Sandwich pattern can be identified during both uptrends and downtrends, making it versatile for various market conditions.
- Q: How reliable is the Stick Sandwich pattern on its own?
- A: The Stick Sandwich pattern may not always be a reliable indicator on its own. It is important to combine it with other technical analysis methods for more accurate trading decisions.
- Q: What is the best way to use the Stick Sandwich pattern?
- A: The best way to use the Stick Sandwich pattern is to identify it at significant support or resistance levels, or at important moving averages like the EMA200. Always combine the pattern with other technical analysis tools for more accurate predictions.
- Q: How can I practice using the Stick Sandwich pattern?
- A: You can practice using the Stick Sandwich pattern by starting with a demo account on a trading platform like IQ Option. This will allow you to train and practice different scenarios without risking your capital.