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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 Separating Lines

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 07/24/2017
21,513 -66.90 -0.3%
9,428 -43.07 -0.5%
719 -6.46 -0.9%
6,411 23.06 0.4%
2,470 -2.63 -0.1%
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9.0%
19.1%
10.3%
Tom's Targets    Overview: 07/14/2017
21,850 or 21,000 by 08/01/2017
9,950 or 9,400 by 08/01/2017
740 or 685 by 08/01/2017
6,450 or 6,175 by 08/01/2017
2,525 or 2,400 by 08/01/2017

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 separating lines candlestick pattern reminds me of the meeting lines candlestick except for two things: The behavior and candle colors are different.

The bearish separating lines is a bearish continuation pattern. For a two line candle, the bearish separating lines combination is rare, so you will have a difficult time finding examples. Overall performance is just mid list, too, so you might think that it was not be worth the hunt. However, the candle does very well after an upward breakout.

Bearish Separating Lines: Important Results

Theoretical performance: Bearish continuation
Tested performance: Bearish continuation 63% of the time
Frequency rank: 82
Overall performance rank: 40
Best percentage meeting price target: 67% (bull market, up breakout)
Best average move in 10 days: 8.36% (bear market, up breakout)
Best 10-day performance rank: 5 (bear 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.

The ideal bearish separating lines candlestick
Bearish Separating Lines
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Bearish Separating Lines: Discussion

The bearish separating lines candlestick acts in theory as it does in reality, as a bearish continuation of the exiting price trend 63% of the time. That is quite good. As I mentioned in the introduction, the candle is rare as demonstrated by a frequency rank of 82 out of 103 candle types.

The overall performance rank is 40, which is about mid list. However, the bearish separating lines candlestick performs best after upward breakouts. You will want to avoid those with downward breakouts because performance is lousy.

The average rise 10 days after the breakout in a bear market is 8.36%, ranking 5th. I consider moves of 6% or higher to be good, so this is superb.

Bearish Separating Lines: Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternDownward.
ConfigurationLook for a tall white candle in a downward price trend followed by a tall black candle. The opening price of the two candles should be similar.
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Bearish Separating Lines: 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 separating lines candles that appear within a third of the yearly low perform best -- page 644.
  2. Select tall candles for the best performance -- page 645.
  3. Price breaks out downward most often -- page 647.

Bearish Separating Lines: Example

The bearish separating lines candlestick on the daily scale

The chart shows bearish separating lines candlestick circled in red on the daily scale. The downward price trend begins in mid June, then goes horizontal into July before resuming the down swing when the bearish separating lines appear. The first candlestick is a tall white one. A tall black candle, which does not appear to be tall but is when taken into the context of the many small candles in early July, shows and the opening prices match between the black and white candles.

The breakout from this bearish separating lines is downward when price closes below the bottom of the two-day candle. Since price enters from the top trending down and breaks out downward, this candlestick is a continuation pattern. It continues the downtrend already underway.

-- Thomas Bulkowski

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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. I'm a recovering something or other.