Market may gap up sharply as it opens but it closes unchanged from the prior session’s close during an uptrend. Such a pattern is called Bearish Meeting Lines Pattern, which is a pattern that reflects a balance between the bulls and the bears.
1. Market is characterized by uptrend.
2. We see a long white candlestick in the first day.
3. Then we see a long black candlestick, which has a body that is also higher than the previous trend on the second day.
4. The close of both days is same or almost same.
5. Both of the candlesticks are long but second day candlestick may be shorter than the first.
The Bearish Meeting Lines Pattern is a top reversal pattern suggesting a stall in uptrend. The first candlestick, a long white one, shows that the bullish momentum is going on. The next day opens higher with a gap but then the bears pull prices down to the prior day’s close. So the initial optimism on the second day’s opening now turns into concern of the longs.
The Bearish Meeting Lines Pattern is similar to the Bearish Dark Cloud Cover Pattern. The Dark Cloud Cover has the same two-candlestick pattern. The main difference between the two is the fact that the bearish counterattack line does not usually move into the prior session’s white real body. It just gets back to prior session’s close. The Bearish Dark Cloud Cover Pattern’s second line pushes well into the white real body. So the Dark Cloud Cover Pattern is a more important top reversal signal than the Bearish Meeting Lines Pattern.
A confirmation on third day is required to be sure that the uptrend has reversed. This confirmation may be in the form a black candlestick, a large gap down or a lower close on the third day.