Side-by-side candlesticks are difficult to interpret because they can be either black or white, and can also be bearish or bullish. However, understanding the distinctions is going to be useful in spotting a valuable and relatively strong indicator.
The bullish version may be either white or black. In the white bullish side-by-side, you find three white sessions. Most chartists are used to seeing three white sessions as clearly bullish. This is one of those patterns, and contains specific attributes:
1. The first session is white and is followed by an upside gap.
2. The second session is also white and continues the upward trend.
3. The third session opens and closes at approximately the same price levels as the second session. This means there is an invisible downside gap between the close of session two and the open of session three, but the session eliminates it.
Note that the original upside gap between the first two sessions is never filled, making the bullish indication quite strong. This signal foreshadows continued upward price movement.
The black bullish side-by-side is more confusing, if only because two of the three sessions are black. The black variety is spotted by the following:
1. The first session is the same as the white variety of the side-by-side. It is white and is followed by an upside gap.
2. The second session is black. This means that it opens even higher than the original gap but closes lower. However, it fails to fill the gap created between the first and second days.
3. The third session is also black, with opening and closing about the same price levels as session two. This means there is an invisible gap between the two, from the low close of session two to the higher open of session three. However, because the original gap is never filled, this demonstrates lack of bearish momentum and a strong likelihood of continued upward price movement.
Either the black or white bullish side-by-side patterns are going to be found in many different circumstances. They may work as bullish continuation, bearish reversal, or the end of sideways price indecision. In any of these cases, the signal is a strong one and should get your attention.
As with all candlestick indicators, it is very important to get confirmation before proceeding. These patterns, when working as possible reversals, are strongest when they test support and then move upward. Any indicator is going to be most reliable as a reversal at the trading range borders. Because the side-by-side is involved with momentum, a worthy form of confirmation is found in momentum oscillators. For example, relative strength index (RSI) that indicates the same direction as the candlesticks is strong confirmation. Of course, if RSI or other oscillators contradict that the candlesticks show, you have to decide which one is more reliable.
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