Thrusting Candlestick Pattern

Thrusting candlestick patterns are bullish reversal candlestick patterns. A Thrusting candlestick pattern is very similar to a Piercing candlestick with one slight difference. A Thrusting candlestick does not close as high into the previous candlestick’s real body as a Piercing candlestick pattern.

A Thrusting candlestick pattern closes less than 50% into the real body of the preceding candlestick. A Piercing candlestick pattern closes 50% or more into the preceding candlestick’s real body. In summary, a Thrusting candlestick pattern does not penetrate as deeply into the preceding candlestick’s real body when compared to a Piercing candlestick pattern.

While a Thrusting candlestick is slightly less convincing of a possible reversal than a Piercing candlestick, its bullish reversal qualities should not be ignored. This candlestick can still signify major changes in trends.

When a Thrusting candlestick pattern is confirmed with high buying volume, the chances for a successful reversal are increased significantly. Let’s start by reviewing the requirements for Thrusting candlestick patterns.

Requirements

Listed below are the requirements for a Thrusting candlestick pattern.

• It is a bullish reversal candlestick pattern
• It must always have a a green colored real body
• It must close higher than the preceding candlestick’s closing share price, but less than 50% into the preceding candlestick’s real body

Characteristics & Observations

Listed below are some of the characteristics and observations I have made with Thrusting candlestick patterns during my investing career.[s2If !current_user_can(access_s2member_level1)]…..

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• If the share price was in a clearly defined downtrend before forming a Thrusting candlestick pattern, there is a greater chance for a successful trend reversal
• Thrusting candlestick patterns always seem to have a re-test of their support area; sometimes a 2nd bullish reversal candlestick pattern develops in the same area

Support Area

The very bottom of a Thrusting candlestick pattern is considered the support area for this particular candlestick. That would mean using the very bottom of the lower shadow as the support area.

The Support Area for a Thrusting Candlestick Pattern

If a candlestick pattern closes below the support area from a Thrusting candlestick pattern, the support area is considered null and void. However, I like to see 2 closes below because 1 does not make a trend. One close below could be a potential “Bear Trap”.

Bearish Counter-Part

The bearish counter-part of a Thrusting candlestick pattern would be a Dark Cloud Cover candlestick pattern, with one exception. A Thrusting candlestick pattern does not close 50% or more into the real body of the preceding candlestick. A Dark Cloud Cover candlestick pattern does. The Dark Cloud Cover candlestick pattern is actually a better counter-part for the Piercing candlestick pattern.

I think I need to create a candlestick pattern called the “Scattered Clouds” candlestick pattern. This would be a candlestick that gaps above the previous candlestick’s closing share price. However after the gap-up, the selling begins and the share price falls into the real body of the preceding candlestick. But this drop does not fall farther than the 50% mid-point of the preceding candlestick’s real body. A Dark Cloud Cover candlestick is required to fall further than 50%.

Trading Strategies

Watch the next candlestick after a Thrusting candlestick pattern – if the candlestick makes a higher high and buying volume is increasing, look to jump in on any short-term pullback.

The less risky trade set-up is to wait for the share price to pullback to the support area from a Thrusting candlestick.

Real Chart Examples

This 5 year weekly candlestick chart for Sirius XM Holdings has 3 different Thrusting candlestick patterns. Two of them have almost identical support areas. Only the first one was created on nice buying volume though.

Each of the Thrusting candlestick patterns for Sirius XM Holdings (SIRI) led to higher share prices in the near to medium-term

When you have multiple bullish reversal candlestick patterns all develop in a general area, that area should provide very stiff support. Strong support levels are good to know on any stock chart, especially when the market starts to turn negative.

For SIRI, its share price never came back down to officially re-test the 1st Thrusting candlestick pattern’s support area. The closest either of the next 2 Thrusting candlesticks got was as low as about the closing share price for the 1st Thrusting candlestick. Both the 2nd and the 3rd Thrusting candlesticks stayed above the close from the first Thrusting candlestick.