How to Apply the Belt Hold Candlestick Pattern to Your Trading in 2021.

What is the Belt Hold Candlestick Pattern?

The Belt Hold Candlestick Pattern is a modified type of the Marubozu candlestick, with a specific set of criteria and a high probability of wins.

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In essence, the Belt Hold Candlestick Pattern is composed of two candlesticks – the Belt Hold Candlestick and the Candlestick preceding it.

But you wonder what the heck this Marubozu candlestick is, right?

The Marubozu candlestick is the direct opposite of the Doji candlestick.

A Doji candlestick has the opening and closing prices both at the same level, approximately in the middle of the candlestick dimension.

A Marubozu candlestick, however, has the opening and closing prices at the extreme ends of the candlestick, without an upper and a lower wick.

Well, we mentioned that the Belt Hold Candlestick Pattern is a modified type of Marubozu candlestick.

To understand better, let us first mention that there are two Belt Hold Candlestick Pattern types – Bullish and Bearish.

Terms we shall use in defining these two types of Belt Hold Candlestick Patterns include:

  • Belt Hold Candlestick – this is the main candlestick that defines whether the pattern you are dealing with is really a Belt Hold or something else.

It is the current candlestick that acts as a trigger for the pattern.

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  • Previous Candlestick – this is the candlestick preceding the Belt Hold Candlestick.

Bullish Belt Hold Candlestick Pattern.

Here are the criteria that a candlestick pattern must meet to qualify to be a Bullish Belt Hold candlestick pattern:

  • The Belt Hold Candlestick must open lower than the low of the previous candlestick (Optional).
  • The Belt Hold Candlestick never trades lower than its opening price – has no lower wick.
  • That Belt Hold Candlestick must be bullish.
  • Belt Hold Candlestick must close within the body of the previous candlestick (Optional).
  • The Belt Hold Candlestick must close near its highest high (Optional).
  • The previous candlestick must be bearish.

Bullish Belt Hold Pattern

Bearish Belt Hold Candlestick Pattern.

Here are the criteria that a candlestick pattern must meet to qualify to be a bearish Belt Hold candlestick pattern:

  • The Belt Hold Candlestick must open higher than the high of the previous candlestick (Optional).
  • The Belt Hold Candlestick never trades higher than its opening price – has no upper wick.
  • That Belt Hold Candlestick must be bearish.
  • The Belt Hold Candlestick must close within the body of the previous candlestick (Optional).
  • Belt Hold Candlestick must close near its lowest low (Optional).
  • The previous candlestick must be bullish.

Bearish Belt Hold Pattern

You can see how the Belt Hold Candlestick Pattern is a modified Marubozu.

The bullish one has no lower wick while the bearish one has no upper wick.

The Marubozu candlestick has no upper and lower wicks and the open and close are on the opposite ends of the candlestick.

The criteria indicated as optional may or may not be present.

If all other criteria and only the optional ones are missing, then take that as a Belt Hold Candlestick Pattern but trade conservatively.

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What the Belt Hold Candlestick Pattern Implies.

The bullish Belt Hold pattern has no lower wick hence a shaved bottom.

On the other hand, the bearish Belt Hold pattern has no upper wick hence a shaved top.

That shows that for the bullish belt hold, the price never closes below the open but only above it while for the bearish one, the price never closes above the open but only below it.

A bullish Belt Hold hints at a strong buying pressure such that sellers could not gain even the slightest ground since the opening price.

This is because the price never at all moves below the opening price during the span of the Belt Hold candlestick.

On the contrary, a bearish Belt Hold points towards a strong selling pressure where buyers could not have even the slightest win since the opening price.

It is so because the price never at all moves above the opening price during the span of the Belt Hold candlestick.

Applying the Belt Hold Candlestick Pattern to Your Trading.

To this end, you understand clearly, what the Belt Hold Candlestick Pattern is.

But do you understand how you can apply it to your trading in 2021 to make even more money?

In this post, I will be walking you through ways you can apply the Belt Hold Candlestick Pattern to your trading in 2021.

Basically, there are two ways you can apply the Belt Hold Candlestick Pattern to your trading in 2021 namely:

  • Belt Hold Retest and Rejection.
  • Consecutive Unidirectional Belt Hold Patterns.

Trading The Belt Hold Pattern

A. Belt Hold Retest and Rejection.

Trading the Belt Hold Candlestick Pattern in this manner involves a number of steps and here they are:

  1. Spot a Belt Hold Candlestick Pattern.

You already know what a bullish and a bearish Belt Hold Candlestick Pattern looks like, right?

Well, if you don’t, you can revisit the introduction to this post and you will clearly see how we defined them.

Simply, this step requires you to identify either a bullish or bearish Belt Hold Candlestick Pattern.

Make sure all the essential criteria are met and only those indicated as optional may be exempted for either type.

If the optional criteria are present, it forms even a stronger bullish or bearish signal, depending on the type of Belt Hold candlestick pattern you spot.

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Remember to match the type of belt hold candlestick pattern you identify with its context.

Bullish patterns may be spotted where the price is in an upward momentum or reversing upwards.

Bearish patterns, on the other hand, may be spotted where the price is in a downward momentum or reversing downwards.

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  1. Draw Minor Support or Resistance Levels.

If you spotted a Bullish Belt Hold Candlestick Pattern, draw minor support at the low which also serves at the open of the belt hold candlestick.

Did you spot a Bearish Belt Hold Candlestick Pattern instead?

Then draw a minor resistance at the high which also serves as the open of the belt hold candlestick.

  1. Look for Attempts to Break Support or Resistance.

Was yours a bullish belt hold pattern followed by a support level at the low of the belt hold candlestick?

Then you will look for attempts of the price to fall to the support level.

However, those attempts must fail by having the price being rejected upwards if it at all breaks the level during the span of any candlestick if you will proceed to the next step.

If the minor support is broken at this point, then such Belt Hold pattern becomes invalid.

Bearish belt hold pattern followed by a minor resistance at the high of the belt hold candlestick?

Observe to see the price trying to rise to the resistance level, but being rejected downwards if it at all breaks the level during the span of any candlestick.

If it succeeds in breaking the minor resistance, then the signal is distorted and that’s where we call it quits for that set-up.

  1. Enter Buy or Sell Position.

If the bullish belt hold pattern’s minor support is retested successfully without being broken downwards, then enter a buy position.

On the flip side, if the bearish belt hold pattern’s minor resistance is retested successfully without being broken upwards, then sell.

  1. Stop Loss and Take Profit.

For the buy position, place your Stop Loss just below the minor support you drew. For the sell position, however, place the Stop Loss just above the minor resistance you drew.

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Adjust your Take Profit in adherence to proper risk to reward ratios of at least 1:2.

Exercise trader discretion to weigh how significant the resulting price movement is likely to be if you want to target more.

B. Consecutive Unidirectional Belt Hold Patterns.

The belt hold candlestick of the belt hold pattern has an opening price which is always at its lowest or highest level.

That implies, the pattern can be used to track support and resistance levels of the price, especially when the pattern occurs consecutively, unidirectional, and at the same level.

That is so because at least for that one candlestick, the bulls are in total control if the bullish belt holds, or bears are in absolute control if the bearish belt holds.

Add one bullish belt hold pattern at the same level where the first bullish one occurred, and still another bullish one at the same level, and you can be sure that you have just found a strong support level.

The opposite is true for bearish belt hold patterns and a resistance level.

This second way of applying the belt hold candlestick pattern to your trading is based on the above basis.

Here are the irreducible minimums for this kind of trading:

  • Consecutive belt hold candlestick patterns.
  • Belt-hold candlestick patterns of the same type (All bullish or all bearish).
  • Belt-hold patterns developing around the same price level.

Here are the simple steps to this kind of trading:

  1. Spot a Belt Hold Candlestick Pattern.

You definitely know how the belt hold candlestick pattern looks like so far, don’t you?

Well, all you need to do here is to just spot a bullish or a bearish belt hold candlestick pattern.

Do not worry so much about the context here.

  1. Spot a Second Belt Hold Candlestick Pattern.

Now, if you spotted a bullish belt hold pattern in the first step, the next you should also identify must be bullish as well.

On the flip side, if you spotted a bearish belt hold pattern in the first step, you must spot a second bearish belt hold pattern also.

Is there something I’m forgetting?

Something significant, indeed.

This second bullish or bearish belt hold pattern you are looking for must form at the same level as the first, such that the minor support or resistance levels of the belt hold candlesticks are almost on the same level.

I know you have questions and among them is if you should give up on the signal if an opposite belt hold pattern forms.

Also Read: – HOW TO USE THE TWO-BAR REVERSAL TRADING PATTERN TO TRADE PROFITABLY IN 2021

Well, it depends.

You should give up on the signal if the second belt hold candlestick pattern is opposite to the first and occurs at the same price level as the first.

One of the irreducible minimums of this manner of trading the belt hold pattern is consecutive belt hold patterns.

Consecutive means following each other uninterrupted, so if an opposing belt hold pattern forms before the one you are looking for, and at the same price level as the first, abort mission!

If that second belt hold candlestick pattern that opposes the first but does not occur at the same price level as the first, look on.

You are waiting for the second belt hold pattern which is unidirectional to the first and occurring around the same price level as that first one.

  1. Draw Major Support or Resistance Levels.

Did you identify a bullish belt hold pattern in the first step?

You should have drawn minor support at the low of the belt hold candlestick.

If you spotted another bullish belt hold pattern occurring after the first and at the same level as the first, you should also have drawn another minor support at the low of the belt hold candlestick.

In this step, join the two minor support levels to form a major support level.

You should have drawn a minor resistance at the high of the belt hold candlestick of the first bearish belt hold pattern.

Further, another minor resistance was needed at the high of the belt hold candlestick of the bearish belt hold pattern occurring after and at the same level as that first pattern.

Here, join the two minor resistance levels to form a major resistance level.

  1. Look for a Trigger.

The belt hold candlestick pattern has now already helped you establish a key support or resistance level.

What you are looking for, next, is a trigger to buy at support and sell at resistance.

So what triggers are the most potent in this case?

For a support level established using bullish belt hold patterns, go for bullish candlesticks such as a bullish pin bar and bullish engulfing.

For a resistance level established using bearish belt hold patterns, however, look for bearish candlesticks such as a bearish pin bar and bearish engulfing.

  1. Enter Buy or Sell Position.

Enter a buy position following a bullish trigger at an established support level.

Conversely, enter a sell position after a bearish trigger at an established resistance level.

  1. Stop Loss and Take Profit.

For the buy position, place your Stop Loss just below the major support you drew.

For the sell position, however, place the Stop Loss just above the major resistance you drew.

Adjust your Take Profit in accordance with a proper risk to reward ratio of at least 1:2.

Gauge how significant the resulting price movement is likely to be if you want to target more, as a trader.


*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
 

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