A candle over candle formation, also called a candle over candle reversal, could be a Bullish Kicker:

Bullish kicker chart pattern which is 3 down days and then 1 up day

A candle over candle pattern could be a flush or oversold pattern. A candle over candle pattern is a two day pattern and as long as the close of the second day of the reversal is above the high of the first day, it could qualify as a candle over candle pattern.

In the chart below, GNCA has done a sweet flush, with a candle over candle reversal coming out of an RSI oversold, with a sweet volume spike. That’s beautiful.


Here’s a candle over candle formation that took 3 days to get the signal:


The important lesson when dealing with candle over candle reversals is to not be too rigid with your definition of what a candle over candle reversal pattern is. In the chart of USAP above, after the doji on day one, an inverted hammer formed with the close of the day being almost even with the close of the previous day. This is not a good candle over candle signal. The long upper shadow suggests lots of selling near $30.50 and you don’t know if the price of USAP will just chop out and go sideways. However, the third day clearly closed above the close of both the previous two days and so we finally have our candle over candle reversal signal.

It is important that the candle over candle pattern occurs after an extended move down. You want the RSI to be oversold although that is not mandatory. The candle over candle formation should occur at some significant support area. Finally, the stock needs to have a history of bouncing and running off that significant support level.

<< Back to Glossary Index