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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski’s Bearish Belt Hold

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 08/17/2017
21,751 -274.14 -1.2%
9,152 -224.77 -2.4%
734 -5.20 -0.7%
6,222 -123.20 -1.9%
2,430 -38.10 -1.5%
YTD
10.1%
1.2%
11.3%
15.6%
8.5%
Tom's Targets    Overview: 08/14/2017
22,250 or 21,500 by 09/01/2017
9,700 or 8,900 by 09/01/2017
750 or 710 by 09/01/2017
6,500 or 6,150 by 09/01/2017
2,525 or 2,425 by 09/01/2017

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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The bearish belt hold candlestick is an opening black marubozu candlestick in an uptrend. Candle theory says that the bearish belt hold is supposed to act as a bearish reversal, and it does -- 68% of the time in a bull market. Not only is it a strong performer, but you can find it in your finer boutiques and upscale department stores (meaning it is plentiful). Although price will reverse frequently after the candle appears, price usually does not drop far as the overall performance rank attests.

Important Results

Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 68% of the time
Frequency rank: 19
Overall performance rank: 63
Best percentage meeting price target: 75% (bull market, up breakout)
Best average move in 10 days: 4.58% (bear market, up breakout)
Best 10-day performance rank: 33 (bull market, up breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Image of a bearish belt hold candlestick
Bearish Belt Hold

Discussion

As the important results show (see above), the pattern behaves in reality (tested in the lab) as it does in theory. Price reverses the uptrend 68% of the time, which is a strong showing. The frequency rank is 19, meaning it is a plentiful candle, but the overall performance rank is just 63. That is not terrible, but it suggests that the move after the breakout does not amount to much. In fact, the best move during the coming days is about 4.6% where an outstanding performance would be 6% to 9%, and, oddly, the 4.6% number occurs during a bear market after an upward breakout.

The highest performance rank (meaning the best showing) is 33, and that occurs in a bull market after an upward breakout. An up breakout is when price closes above the top of the candlestick. Since this candle is supposed to act as a reversal, the best performing bearish belt holds are those acting as continuation patterns, not reversals.

Identification Guidelines

CharacteristicDiscussion
Number of candle linesOne.
Price trend leading to the patternUpward.
ConfigurationPrice opens at the high for the day and closes near the low, forming a tall black candle, often with a small lower shadow.
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Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Bearish belt hold candles that appear within a third of the yearly low perform best -- page 121.
  2. Belt hold candles within a third of the yearly low frequently act as reversals -- page 124.
  3. Breakouts from bearish belt hold candles below the 50-trading day exponential moving average tend to outperform -- page 125.

Example

The bearish belt hold candlestick on the daily scale

The chart shows two bearish belt hold candlesticks on the daily scale. The first, A, forms a small Eve & Eve double top chart pattern (if you ignore the shallow valley between peaks C and A), where the belt hold is on the right peak. The candlestick accurately predicts a downturn in the stock.

Belt hold B tells you that the upward retrace of the downtrend is over. These types of reversal candles that form at the peak of a retrace against the prevailing trend (in this case, the longer term trend is downward and the candle marks the end of a short-term up trend) tend to work best. If you are looking for a trading setup, then that is what you should search for: the candle to appear at the top of a retrace against the prevailing price trend.

-- by Thomas Bulkowski

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See Also

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Lawyers have feelings too (allegedly).