Stick Sandwich Candlestick Patterns: Key Points and Usage

Hello, dear friends. Traditional Japanese candlesticks are a powerful tool for technical analysis in financial markets. They can be used to predict trends, future price movements and identify other important price action patterns. Candlesticks are a popular tool that is frequently used by both beginner and experienced traders, as they are relatively easy to understand and interpret. Especially in fast-moving and highly liquid markets like Forex, Japanese candles are of great importance for shaping trading decisions. One of these candlesticks is the Stick Sandwich candlestick pattern. 

• Topic: Stick Sandwich
• Type: two-way
• Trend direction: Reversal

What is a Stick Sandwich Candlestick Pattern?

A Stick Sandwich is a candlestick pattern that shows a possible change in price direction in trading. It forms when two candles of the same color appear on both sides of an opposite-colored candle. The middle candle closes below or above the first one, and the third candle returns to the same closing level as the first. This creates a "sandwich" look on the chart. This pattern is often understood by traders as a clue that the price might stay level for a while before changing direction.

Across trading communities, people often search questions such as "What is stick sandwich candlestick pattern?", "What is the most powerful candlestick pattern?", "What is a sandwich candle?", and "What is a sandwich pattern?". These are among the most common queries because chart followers watching charts want to learn how these candle shapes reflect price movements. All these questions are explained above, and one can say that the Stick Sandwich candlestick pattern is among the strongest candle patterns in trading. It stands out because of its clear structure and the way it reflects short-term shifts in price direction. Candlestick followers often find it useful when studying both bullish and bearish formations.

Where the Name Comes From?

The name "Stick Sandwich" comes from the way the pattern looks. Two candles of one color act as the "bread," and the opposite-colored candle in the middle is the "filling." This clear visual makes it easy to spot on a chart, even for beginners.

Toward the end of a trend, the stick sandwich candle pattern can sometimes appear before a pause or small reversal. While it does not always signal a big change, many traders watch for it closely as part of their chart study. Overall, the stick sandwich candlestick pattern helps us read the story of price action in a simple and visual way.

Types of Stick Sandwich Candlestick Patterns

This pattern is often seen at the end of a bullish trend or bearish trend and can signal a possible reversal. There are two types of Stick Sandwich candlestick patterns:

1. Bearish Stick Sandwich candlestick pattern – usually appears after an uptrend and suggests that the upward movement may be losing strength.

Bearish Stick Sandwich

2. Bullish Stick Sandwich candlestick pattern – often forms at the bottom of a downtrend and indicates that the downward movement could be coming to an end.

Bullish Stick Sandwich

Both types rely on the color sequence of the candles, which is the most important factor. Even if the size and exact opening or closing levels differ, the pattern's visual structure makes it easier to spot possible changes in price direction. This formation can be useful for anyone analyzing charts and looking for shifts in the trend.

Bearish Stick Sandwich Candlestick Pattern

A Bearish Stick Sandwich is a candlestick formation that appears during an uptrend and can point to a possible shift in direction. The key element of this pattern is the color of the candles rather than their exact opening or closing levels. It consists of three candles:

• First Candle: A long green (bullish) candle showing the ongoing upward move.
• Second Candle: A red (bearish) candle that forms after the first one. Its size may vary; sometimes it is smaller than the other two, and sometimes larger. It shows short-term weakness within the uptrend.
• Third Candle: Another green (bullish) candle that opens below the red candle's close. It can close at the same level as the first candle or even slightly higher, forming a wider green body. This closing action creates the "sandwich" look and suggests that the current uptrend may be losing strength.

What matters most in this pattern is the color combination of green, red, and green because it shows the struggle between buyers and sellers. Even if the candle sizes or levels differ, the message of the pattern stays the same and points to a possible change in the current bullish trend.

Trading the Bearish Stick Sandwich

If the Bearish Stick Sandwich forms near a resistance level, the likelihood of a trend reversal is higher. The Bearish Stick Sandwich can create a selling opportunity in uptrends. After seeing the formation, it is best to look for additional confirmation signals to wait for the trend to reverse definitively.

• Entry: As the Bearish Stick Sandwich pattern is formed at the top of an uptrend, a sell or trend reversal is usually expected after the close of the third candle. When setting an entry level, a break below the third candle or confirmation of the decline by the next candle is expected. Some traders may wait for the break to confirm the continuation of the decline, while others may prefer to enter as soon as the price starts to decline.
• Stop Loss: The stop-loss level is usually set outside the trend where the pattern forms. This helps limit possible losses if the trade fails.
• Target: The target level can vary depending on how far the downtrend might extend. Some may believe that the decline following the pattern could continue to the size of the previous downward movement. However, in determining the target, other technical analysis tools and market conditions should also be taken into consideration. Additionally, Fibonacci retracement levels, risk/reward ratio, and other technical analysis tools can be utilized.

Take a look at the trading example in the following L'OREAL stock:

Bearish Stick Sandwich Sell Signal in L'Oréal Stock

Even in a strong uptrend, the Bearish Stick Sandwich can appear as a subtle warning. By noticing the color sequence, anyone watching the chart can spot moments when buying strength may weaken and prepare for a possible shift in the trend.

Bullish Stick Sandwich Candlestick Pattern

A Bullish Stick Sandwich is a candlestick pattern that often forms near the bottom of a downtrend and can hint at a possible shift toward an upward move. The main focus of this pattern is the candle colors: red, green, and red, while the opening and closing levels can vary slightly. It includes three candles:

• First Candle: A red (bearish) candle that appears during a downtrend. It usually has a longer body and shows ongoing selling activity.
• Second Candle: A green (bullish) candle that opens below the first candle's close. Its size can change; sometimes it is smaller, other times larger. It shows a short-term attempt from buyers to push the price up.
• Third Candle: Another red (bearish) candle that opens above the green candle's close. It may close at the same level as the first candle or slightly lower, giving the pattern a "sandwich" look.

Even if the candle sizes or closing points are not identical, the pattern's color sequence tells an important story. The green candle between two red ones shows buyers trying to stop the fall, suggesting that the downtrend could be losing strength and a change may be near. The Bullish Stick Sandwich pattern might be viewed as an early indication of a forthcoming bullish trend.

Trading the Bullish Stick Sandwich

The Bullish Stick Sandwich pattern is more likely to signal a trend reversal if it forms near a support level. This pattern can create a buying opportunity in downtrends. After seeing the formation, it is best to wait for the trend to reverse definitively and to use it in conjunction with other analytical tools.

• Entry: When we think that an uptrend will begin in the current trend, we can identify an entry point such as the high of the third candle or the point where the pattern is confirmed and the price starts to move in an upward direction.
• Stop Loss: Commonly, a stop-loss is placed below the formation of the pattern or outside the trend. This helps limit possible losses if the trade is unsuccessful.
• Target: When setting target levels, it is important to consider other factors such as technical analysis tools and support levels. In addition, it is also important to consider the capacity for the price to rise as much as the pattern formation.

Here is an example of a trade in Deutsche Bank stock:

Bullish Stick Sandwich Buy Signal in Deutsche Bank Stock

After a period of falling prices, the Bullish Stick Sandwich can signal that selling is slowing down. The green candle between the red ones shows where buyers are stepping in, giving a simple and clear sign that the trend may be changing upward.

Stick Sandwich candlestick patterns give a quick view of how buying and selling are interacting. The Bearish pattern can hint at a slowing uptrend, while the Bullish pattern may suggest that a downtrend is losing strength. Watching these patterns on a chart helps anyone understand possible shifts in price without relying on complex tools, making it easier to follow market movements in real time.

Take care: Patterns like the Stick Sandwich are helpful, but no single candlestick pattern should be treated as a complete trading strategy. Relying on just one pattern can be risky. These patterns work best when combined with other analysis tools, and careful attention to risk management and decision-making is always important.