Stick Sandwich
Tue, Apr 15A Stick Sandwich is a three-candlestick formation characterized by the middle candlestick being a different color from the two surrounding it. The first and third candlesticks exhibit a wider trading range compared to the middle one, giving the pattern the appearance of an upright sandwich. Stick Sandwich patterns can indicate both bullish and bearish trends.
To recognize a Stick Sandwich, look for these criteria:
- There must be three consecutive candles.
- The middle candle should be the opposite color of the adjacent candles.
- A bearish Stick Sandwich will appear as “white-black-white” or “green-red-green.”
- A bullish Stick Sandwich will appear as “black-white-black” or “red-green-red.”
- The outer candles must have larger trading ranges than the middle candle, making them taller.
- The middle candle should be shorter, allowing it to be engulfed by the first and third candles.
- The bullish Stick Sandwich should form during a downtrend, while the bearish Stick Sandwich should form during an uptrend.
Meaning:
Since the Stick Sandwich can manifest in both uptrends and downtrends, it is crucial to observe the colors of the candles. What colors are the candlesticks on either side? What color is the middle candlestick?
In a bullish market, the bulls dominate until the second candle appears, indicating that buying pressure may be waning. Conversely, in a bearish market, the opposite holds true.
The equal closing prices of the two outer candles provide strong support, increasing the likelihood of a reversal. The fact that both candlesticks closed at the same level signifies the establishment of a support level.
Look for the confirmation level, which is the midpoint between the last two closing prices. Ensure that the price crosses above this point for a bullish scenario or below it for a bearish scenario before proceeding.
Examine the last candlestick for additional clues, particularly its closing price. Wait for the high of the third candlestick to break for a bullish Stick Sandwich or the low for a bearish Stick Sandwich.
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