Do you think I made a mistake when there is a candlestick pattern with such a funny name? It’s no different than a joke when bringing dishes to name patterns in trading. But in fact, the Stick Sandwich candlestick pattern is an extremely accurate bearish-to-bullish reversal signal. So what is the reason to use it to signal an uptrend in IQ Option? Please join me in finding an answer to that question.
What is the Stick Sandwich candlestick pattern?
Stick Sandwich is a bearish to bullish reversal pattern. It usually occurs at the bottom of a downtrend or in sideways price zones.
The Stick Sandwich pattern is composed of a trio of candles.
- The market is in a downtrend or is moving sideways.
- The first candle is a strong bearish one with a long body and no lower shadow.
- The second is a strong bullish candle. Especially, it must have a long body and close higher than the high of the first candle.
- The third one has a bullish gap. Then it falls sharply and engulfs the first and second candles.
- The first and third candles have the same closing price and there is no lower shadow.
When all the above factors converge, it will be confirmed as a Stick Sandwich candlestick pattern.
This pattern’s name is due to its structure which is shaped like a sandwich. There are 2 strong bearish candles with the same closing price on either side and sandwiched in between is a strong bullish candle.
Market sentiment with Stick Sandwich candlestick pattern
The market is in a downtrend and investor sentiment becomes pessimistic. This is shown by the fact that the session ends with a strong bearish candle with a long body and no shadow below.
The sharp drop in prices attracts bottom-fishing investors. A large buying force helps the market to rise again. The price increases sharply and closes above the candlestick body of the previous session.
After that, investor sentiment becomes more positive and the opening price of the next session creates a bullish Gap. However, the market quickly reverses and the price falls dramatically again. The session ends with a strong bearish candle and closes at the same price as the previous session’s closing price.
In the Stick Sandwich pattern, we can see the Bearish Engulfing pattern. However, most traders see this as a bullish pattern because the closing price of two bearish days formed a hard support zone.
How to trade with Stick Sandwich candlestick pattern in IQ Option
Although the Stick Sandwich pattern is highly reliable in confirming the uptrend, traders need to have a suitable trading method to manage risks well before placing orders. Only execute the UP order when the pattern is complete.
For options trading, open an order as soon as the pattern is confirmed.
For Forex trading, the buy point will be opened when the Stick Sandwich pattern is confirmed. Stop loss will be placed at the nearest bottom of the pattern to avoid the market correction. And take profit will be at least 2 times the distance of the 3rd candle. Or set take-profit twice the distance from the entry point to the stop loss.
The Stick Sandwich reversal candlestick pattern has high reliability so investors need to pay attention whenever this pattern appears. It will effectively increase the profit of your account. And you should remember their features to make the most favorable decisions. Good luck with your trading.