Meeting Lines (or Counterattack Lines) are formed when opposite colored bodies have the same closing price. The first candlestick body is the same color as the current trend. The second body is formed by a gap open in the same direction as the trend. However, by the close it has come back to the previous day’s close. The bullish meeting line has the same criteria as the piercing pattern except that it closes at the same close as the previous day but not up into the body. Likewise, the bearish meeting line is the same as the dark cloud pattern, but it does not close down into the body of the previous day.
Criteria for the Meeting Lines Pattern
- The first candlestick body should continue the prevailing trend.
- The second candlestick gaps open continuing the trend.
- The real body of the second day closes at the close of the first day.
- The body of the second day is opposite color of the first day
- Both days should be long candle days.
Signal Enhancements – The longer the bodies, the more significant the reversal pattern.
Meeting Lines Pattern Psychology
The trend is further promoted by a long body day after a strong trend has been in effect. The energy is increased the second day with a gap in the same direction. Before the end of the day, however, the price comes back to the same closing price of the previous day. This indicates that the other side of the market has now stepped in. Another day, opposite of the predominant trend is required to demonstrate that the trend has reversed. The opposite colored body does not need to be as long as the first body. Please note that in every case a confirmation day is going to be needed. The meeting lines pattern has more strength if there are no shadows at the meeting point.
Recognizing and understanding the psychology that forms the major candlestick patterns will provide completely new insights for investors to understand optimal times to buy and sell. Japanese rice traders realized that prices do not move based on fundamentals but instead that they move based on the investor perception of those fundamentals.
Take advantage of the benefits that Japanese Candlestick trading provides. Opportunities are easily identified and someone will take advantage of the information the signals provide even if you don’t. Once you learn the valuable benefits revealed by Candlestick formations the rewards will be overwhelming.