Topic: Descent Block
Type: Bullish
Trend direction: Reversal
Opposite pattern: Advanced Block
Good day, dear readers, we live in a time where trading in financial markets has become possible in almost all countries around the world. Every day a new trader is trading several types of assets in the financial markets such as stocks, currencies, commodities, etc. with the dream of getting rich. Getting rich, making money, new car, vacation, all this sounds good, right? Just like in life, things may not always go smoothly in the financial markets. From beginners to the most experienced traders, everyone can have their ups and downs. But every successful trader has a unique strategy and a roadmap. So, where should we start? Well, let's start with Japanese candlesticks. Candlesticks are a necessary feature of technical analysis. In this article, we will try to present information about the "Descent Block Candlestick Pattern".
What is
the Descent Block Candlestick Pattern?
"Descent
Block" is the term given to the triple candlestick trading pattern. It is known
as the reversal bullish Japanese candlestick pattern consisting of three red
(black) candles. When observed on charts, it is generally
considered as a signal that the downtrend may reverse or the short-term price
direction may change. According to technical analysts, the Bears are weakening
and the Bulls are gaining strength in the market. For this reason, they refer
to the Descent Block pattern as the Bullish Descent Block Pattern. In order not
to miss the train, we can enter a buy order considering the market conditions.
Let's look at a live example in the market on the "Deutsche Bank AG NA O.N." stock:
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| Descent Block Pattern in the Stock Market |
What is
the structure of the Descent Block Candlestick Pattern?
When the
end of a downtrend starts to become visible in the market, three consecutive
red (or black) candlesticks are observed. The opening levels of these red (or
black) candlesticks occur below the opening level of the previous candlestick,
while their closing levels are above it. However, each of them closes at a
lower level compared to the previous closing level.
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| Types of the Descent Block Candlestick Pattern |
🕯 First
candlestick:
It is a
normal or long red (or black) candle.
🕯 Second
candlestick:
It is
shorter than the first candle and has a long shadow. It is often a red (or
black) candle, and sometimes it can be a green (or white) candle.
🕯 Third
candlestick:
Its body is
shorter than the body of the second candle, and a long shadow is visible. It is
frequently a red (or black) candle, and occasionally it can be a green (or white)
candle.
How is
the Descent Block Candlestick Pattern formed?
Descent
Block Candlestick Pattern consists of three consecutive red (or black)
candlesticks. Each candlestick opens within the body boundaries of the previous
candle and closes below the closing price of the previous candle. Meanwhile, as
the bodies of the three candlesticks decrease in size, their lower shadows
grow. You can see this in the example image below:
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| Descent Block in the Meta Platforme,Inc. stock |
Usually,
the first candlestick is a normal or long red (or black) candle with very
little or almost no shadows. Sellers dominate the market, and the downtrend
continues. Next, a second red (or black) candlestick follows, closing below the
closing price of the first candle. The bearish pressure is still prevailing. We
now have two consecutive red (or black) candlesticks, but the second candle's
body is short while its shadow is long. At this point, sellers start to become
a bit hesitant. Later on, the third candle also closes below the closing price
of the second candle, but it has the smallest body among the three. The
appearance of a shadow on the third candle indicates the weakening of the
sellers. Throughout these three red (or black) candlesticks, the bodies are
gradually becoming shorter, indicating increased market indecision. Moreover,
each day's candle opens within the boundaries of the previous candle's body,
opening higher, while the lower shadows are getting longer. Although the
closing prices of the second and third candles are lower, the difference
between their closing prices is decreasing. All these signs indicate the
weakening of the downtrend, making a reversal in the market inevitable.
How to
trade with the Descent Block Candlestick Pattern?
When
trading in financial markets, it is essential to identify support and resistance levels and pay attention to technical indicators before placing
orders. I believe these are among the main rules of technical analysis.
When trading based on the Descent Block Candlestick Pattern, we should wait for
the completion of the pattern with the closing of the last candle. Then,
setting Buy, Take Profit and Stop Loss levels would be the right approach.
According
to some traders, the Entry order is confirmed at the midpoint of the body of
the last red (black) candle, and they wait for the price to exceed this point.
On the other hand, some traders place a Buy order at the opening point of the
last candle.
The Stop Loss level is commonly set at the lowest shadow of the last candle. However,
sometimes the closing point of the last candle is chosen.
The Take Profit level can be set as Target 1, Target 2, Target 3, and so on. The most
commonly used and reliable target, which is Target 1, is usually set at the
opening price of the first red (black) candle. Here is a live example of this
in the stock "Rolls Royce Holdings ORD GBP0.20":
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| Live Trading with the Descent Block Pattern |
Information. However, there is also the Advance Block candlestick pattern, which is the opposite of the Descent Block candlestick pattern.