A closer look at the month of February shows that we had a bearish engulfing
candle + 2. A bearish engulfing
candle is one where the high of the candle and low of the candle completely engulfs the previous candles high and low(shown with blue lines) and indicates a potential reversal to the downside. The +2 indicates that the bearish engulfing
candle not only engulfed the previous candle, but also engulfed the two candles before the preceding candle as well. February’s low was .10c above October 2019’s low which kept this from becoming a bearish engulfing
+3. While this bearish engulfing
candle on its own is bearish
, a trend reversal isn’t confirmed until/unless we see a price move lower on the following candle(March 2020). If March price moves and closes lower than February’s low it can be viewed as a trend reversal and end of the 10-year bull market rally.
February’s bearish engulfing
candle comes on the heels of a shooting star
candle created in January of 2020. A shooting star
candle is a bearish candlestick
with a long upper wick with little or no lower wick. Shooting stars appear after an uptrend in price. The distance between the highest price of the candle(top of the upper wick) and opening price(top of the candle body) must be twice the distance of the candle’s body to be considered a shooting star
; the upper wick must be twice the length of the candle body. Shooting star
candles are most effective when they occur after a series of three or more consecutive rising candles, which this chart shows.
We now have two bearish
candles on the chart with last months shooting star
and this months bearish engulfing
, both of which indicate that a top in price has likely been made.