More single-stick patterns that depend on market context and offer outstanding trend reversal signals are belt holds. But wait — if you read Chapter 5, you and belt holds have already been introduced, although you may know them by a different name.
Belt holds are exactly the same as marubozus that have no wick on the opening end of the candlestick formation. As with the other patterns in this chapter, the difference is that the usefulness of belt holds as trend reversal signals depends heavily on the market environments in which they appear.
There are two types of belt holds: bullish and bearish. Bullish belt holds feature an open equal to the low and a close near the high, which leaves a small wick on the top of the candle. Bullish belt holds appear during downtrends. For an ideal example of a bullish (long) belt hold, take a peek at Figure 6-19.
Bearish belt holds, on the other hand, open on their highs and close near their lows, thus leaving a small wick on the bottom of the candle. Bearish belt holds show up in the midst of uptrends. You can find a picture perfect version of a bearish (short) belt hold in Figure 6-20.
It’s time to investigate what it’s like to trade signals. These are ...