2007issue C021-3
Constructing the belthold candlestick signal
A belthold is a long candle that gaps away from the prevailing trading area, usually opens at a shaven extreme, and then trades back toward that area. The same open-high-low-close recipe is marked when it tests a range extreme, absorbs a pause inside a trend, or overlaps a candlestick engulfing.
- A belthold is built from an extensive gap away from the prevailing trend, an open at a shaven extreme, and an extremely long candle that trades back toward the prior range.
- A bullish belthold gaps well below the current trading area and recovers into or near it. A bearish belthold is the inverse construction at a high.
- The same recipe can be read as absorption after a decline, continuation after a dip in an advance, or added structure where a prior stall may look like a double bottom.
- A belthold can stand alone or share a sequence with a candlestick engulfing, a meeting line, or a piercing pattern.
What a belthold is
A belthold is a long candlestick that gaps away from the prevailing trading area, usually opens at an extreme, and then trades back toward the prior range. Location decides whether it is read as reversal or continuation. The Japanese name attached to the belthold is yorikiri, taken from a sumo action of pushing while holding the opponent's belt.
The construction is described as readable on any chart scale because each bar's open-high-low-close range is treated as a complete sentiment unit, from day-trading bars to longer investor horizons.
Construction criteria
Construction criteria include an extensive gap away from the prevailing trend, an open at or near the extreme that leaves a shaven head or shaven bottom with any shadow usually very small, and an extremely long bullish candle at a low or bearish candle at a high.
A shaven extreme is an open at the high or low of the bar, leaving little or no shadow at that end of the candle. A bullish belthold is built when price gaps open well below the current trading area and then recovers back into or near that prior area. A bearish belthold is built as the inverse construction: price gaps open above the current trading area and then falls back into that range.
How location changes the reading
After a sustained decline, the gap-down open is framed as sellers rushing to exit, and buying that returns price toward the prior range is read as remaining supply having been absorbed. In an advance, the same gap-and-recovery construction is treated as a continuation reading when a dip that could have been profit-taking is absorbed and buying resumes.
Added structural context is assigned when a belthold prints at the same price area as an earlier bullish candlestick condition such as a bullish harami, or where a prior decline had already stalled, which may be read as a possible double bottom.
Overlap with a candlestick engulfing
The belthold construction can stand alone or overlap other reversal constructions, including a meeting line, a piercing pattern, or a bullish engulfing at a bottom, with the corresponding sell-side constructions at a top. A candlestick engulfing is a later candle whose body covers the prior candle's body. It can occupy the same bar sequence as a belthold at a low or high.
When a belthold and a bullish engulfing form on the same sequence, the overlap is presented as a change in how participants reprice the move after a gap down and immediate strong buying. TradersWeek editorial reading: keep the engulfing body as a second, independent construction check. It does not replace the gap, the shaven extreme, or the long reclaiming body.
All readings on this track · 16 readings
- 1991Candlestick stops from confirmation and engulfing
- 1994Stacked candlestick confirmation on Malaysian indexes, 1994
- 2001Two-bar candlestick reversal as a timed construction
- 2002Engulfing reversal needs trend and a trailing stop
- 2003Engulfing geometry needs a swing slope referee
- 2004Constructing stops from candle control levels
- 2007Abstention completes the engulfing system
- 2007Constructing the belthold candlestick signal
- 2008Evaluating engulfing reversals with opposite-exit tests
- 2010Candle names as a filter, not a catalog
- 2012Critiquing engulfing and volume patterns as crowd psychology
- 2012Candlestick construction of bullish engulfing and a paper-trading rehearsal
- 2015Reading engulfing candles in context
- 2018Treat a bullish engulfing as unfinished work
- 2019Evaluating bullish engulfing with context filters
- 2020Eight-bar pause reclaim entry and a stop-target grid