Rising Window Candlestick Pattern
A Rising Window candlestick pattern is more commonly known as a gap-up. But here at Trendy Stock Charts I like to stick with the Japanese candlestick terminology when possible.
Window candlestick patterns provide very stiff support and resistance areas. In the case of a Rising Window candlestick pattern, a bullish signal is being sent that shares are being bought above the gap-up area more than are being sold.
When this happens, market makers adjust instantly by driving up the stock’s share price to an area where buying and selling demand are more in balance with each other.
This sharp increase in the stock price usually happens outside of the market’s normal trading hours, like after the release of great press or a fantastic earnings announcement.
Requirements
Listed below are the requirements for a Rising Window candlestick pattern.
- It is a bullish continuation candlestick pattern
- A Rising Window candlestick pattern is a 2 candlestick pattern
- There must be an empty space between the two candlesticks in the pattern where the intra-day prices do not overlap
- There must be an empty space between the two candlesticks in the pattern where the intra-day prices do not overlap
- It is possible for the first of the two candlestick patterns to have a red colored real body, however the most likely scenario is two green colored candlesticks that make up the pattern
Characteristics & Observations
Listed below are some of the characteristics and observations I have made for Rising Window candlestick patterns.[s2If !current_user_can(access_s2member_level1)]…..
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- When a Rising Window candlestick pattern is identified at the beginning of a potential uptrend, the candlestick pattern could be considered a bullish reversal candlestick pattern as it is identifying a new uptrend
- If the first of the two candlesticks in a Rising Window candlestick pattern is a red colored real body, the pattern signifies an extremely bullish move for the stock’s share price is upcoming
- If this happens, just jump on the new uptrend and do not wait for a pullback
- This type of bullish set-up is not as common as a regular Rising Window that has 2 candlesticks both with green real bodies
- If this happens, just jump on the new uptrend and do not wait for a pullback
- The first significant pullback to the support area created by the Rising Window candlestick typically provides an excellent trading opportunity to go long on the stock for a quick rebound to the upside
- Purchasing shares on the 1st pullback to the support area from a Rising Window candlestick pattern is generally a lower risk trade opportunity
Bearish Counter-Part
The bearish counterpart to the Rising Window candlestick pattern is the Falling Window candlestick pattern. A Falling Window candlestick pattern is also known as a gap-down. The gap-down created by a Falling Window candlestick pattern creates a very significant resistance area overhead.
Overall, Rising and Falling Window candlestick patterns create very stiff support and resistance areas, respectively. These areas help to set-up higher higher probability trades. The support and resistance areas created from Window candlesticks usually develop because of higher than normal volume.
Support Area
The support area for a Rising Window candlestick pattern is the gap-up area created between the two candlesticks. More specifically, the support area is between the high of the 1st candlestick and the low of the second candlestick in the pattern.
Purchasing shares on the 1st pullback to the support area from a Rising Window candlestick pattern is generally a lower risk trade opportunity.
Trading Strategies
Because a Rising Window candlestick pattern creates a stiff support area, it helps to set-up a higher probability trade. The support area created from a Rising Window candlestick usually develops because of higher than normal buying volume. Because of the amount of buying volume, the gap-up doesn’t close.
If you are long shares when a Rising Window candlestick develops, congratulations. If you don’t own shares though and want to jump in on the uptrend, there are 2 different strategies to employ depending upon your trading style.
- Purchase shares to go long the day the Rising Window candlestick pattern is developing if you are able to; a purchase the next day on any initial pullback is acceptable for trading as well
- Wait until the share price continues its uptrend and starts to pull back; the better performing breakouts almost always have a re-test of the breakout area
If you watch your stocks daily or like to day trade stocks, option #1 is probably for you. Option #2 is for the more risk averse that want to make sure of a new uptrend after a proper re-test of the breakout area.
Real Chart Examples
This chart is a 3 month daily candlestick chart for BlackRock (BLK). The Rising Window candlestick pattern that developed on its chart was an indication that the previous downtrend is over and a new uptrend is taking place.
A Rising Window Candlestick Pattern Developed on BlackRock’s (BLK) Chart, Creating a Support Area For Future Pullbacks
After failing to “close the window” on the first Rising Window candlestick pattern, another Rising Window pattern developed the next day. This second window provided support while BlackRock’s share price was under a period of consolidation.
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