Here's a very interesting candlestick indicator. Many analysts describe the stick sandwich as bullish because of the gaps appearing between sessions 1-2 and 2-3. This anticipates the price next moving upward. This is especially easy to assume because sessions 1 and 3 are both downward sessions, and meet at about the same level. This looks like support … but it usually is not.
Here's what the stick sandwich looks like:
In fact, what usually happens after the stick sandwich appears is a downward movement. This applies in both bullish and bearish markets. So even while this is classified as a "bullish reversal" signal, it is not. It's a bearish continuation signal in both bullish and bearish markets.
So when you see the stick sandwich, think "bear" rather than "bull." Of course, as with all signals of any kind, you also need independent confirmation. So in this particular pattern, look for confirmation of a bearish move to follow. If you don't find it, or you see only bullish signals, be careful. Acting on contrary signals could result in your getting a different kind of sandwich.
To gain more perspective on insights to investing observations and specific analysis, I hope you will join me at ThomsettStocks.com where I publish many additional articles. I also maintain a virtual portfolio of stock at ThomsettStocks.com. For new trades, I usually include a stock chart marked up with reversal and confirmation, and provide detailed explanations of my rationale. Link to the site to learn more.