Stick Sandwich

What Is a Stick Sandwich?

A stick sandwich is a technical trading pattern in which three candlesticks form what seems to look like a sandwich on a trader's screen. Stick sandwiches will have the middle candlestick oppositely colored of the candlesticks on one or the other side of it, the two of which will have a bigger trading range than the middle candlestick. Stick sandwich patterns can happen in both bearish and bullish indications.

Understanding the Stick Sandwich

In a bearish stick sandwich, the outside candlesticks will be long green candlesticks, while the inside candlestick will be shorter and red, and will be totally immersed by the outside sticks. A bullish stick sandwich will appear to be identical however with the contrary tone and trading patterns as the bearish sandwich. Traders normally will follow the closing prices of the third candlestick while choosing to take bullish or bearish positions.

Just like a bar chart, a daily candlestick shows the market's open, high, low, and close price for the afternoon. The candlestick has a wide part, which is called the "real body." This real body addresses the price range between the open and close of that day's trading. At the point when the real body is filled in or black, it means the close was lower than the open. Assuming the real body is unfilled, it means the close was higher than the open.

In spite of the fact that perceiving a stick sandwich pattern is excessively easy, in light of the fact that they can introduce themselves during a bull or bear market, traders must be careful to observe the varieties in question. Fundamental criteria remember accounting for the shade of candlesticks for the two sides, as well as the shade of the candlestick sandwiched in the middle. After this pattern is recognized, traders consider a bearish sandwich to run green-red-green, and a bullish sandwich to run red-green-red.

The hypothetical reasoning behind the stick sandwich approach is that when the market is testing new lows, it will deliver a red day. The following day will out of the blue open higher and will trend higher the entire day, closing at or close to its high. This movement indicates the reversal of a downtrend, and most short traders will continue carefully. Then, at that point, on the next day, prices open even higher, which speeds up shorts covering initially. Notwithstanding, prices then drift lower to close at similar level as two days prior. Keen traders will observe the support price implied by the two same level closes.

Candlestick Pattern Reliability

Not all candlestick patterns function admirably. Their enormous ubiquity has lowered dependability since they've been dismantled by hedge funds and their algorithms. These very much funded players depend on lightning-speed execution to trade against retail investors and conventional fund managers who execute technical analysis strategies found in well known texts. All in all, hedge fund managers use software to trap participants searching for high-chances bullish or bearish results. Notwithstanding, dependable patterns keep on showing up, allowing for short-and long-term benefit open doors.

The following are five candlestick patterns that perform incredibly well as antecedents of price course and momentum. Each works inside the setting of encompassing price bars in predicting higher or lower prices. They are additionally time sensitive in two ways. In the first place, they just work inside the limitations of the chart being checked on, whether intraday, daily, week after week or month to month. Second, their strength diminishes quickly three to five bars after the pattern has completed.

Candlestick patterns capture the consideration of market players, yet numerous reversal and continuation signals discharged by these patterns don't work dependably in the modern electronic environment. Luckily, statistics by Thomas Bulkowski show unusual exactness for a narrow selection of these patterns, offering traders actionable buy and sell signals.

Highlights

• These patterns might demonstrate either bullish or bearish trends, thus ought to be utilized related to different methods or signs.
• One candlestick pattern is the stick sandwich since it looks like a sandwich when plotted on a price chart - they will have the middle candlestick oppositely colored versus the candlesticks on one or the other side of it, the two of which will have a bigger trading range than the middle candlestick.
• Candlestick charts are utilized by traders to decide conceivable price movement in view of past patterns.