“Lki chigai sen” is defined as “lines that move in opposite directions.” The separating lines candlestick pattern occurs when there is an uptrend in the market and when there is pullback as well. The separating lines candlestick pattern is exhibited by a long black (or red) candle; however, the following day opens back up to the same level as it opened the previous day. This pattern has the same open and is the opposite color. This is the exact reverse of the Meeting Lines pattern. In other Japanese circles, this is also known as “Furiwake” or in other words “Dividing Lines.”
Criteria
- An uptrend is in progress when a day then occurs that is the opposite color of the current trend.
- The second day opens at the open of the previous day.
- The second day should open on its low for the day and then proceed to go higher.
Pattern Psychology
During the uptrend a black (or red) body occurs. This causes some concern to the bulls, but the following day the prices gap back up to the previous day’s open. This gives the bulls confidence that the trend still has movement so they jump back in and move the prices higher. Confidence is renewed, and the trend continues. The bearish Separating Line candlestick pattern works the exact same way in the opposite direction.
Candlestick signals identify where money is flowing in and out of stocks/sectors. Being able to identify and understand the investor psychology that creates the candlestick signals produces a huge advantage. It allows an investor to participate in stock investments that have an extremely high probability of moving in the right direction.
When you learn how to utilize the candlestick signals correctly you now have the knowledge to improve your trading techniques for those trading entities you want to trade. You do not have to depend on canned programs that sometimes work and sometimes don’t work and you do not have to buy or sell stock recommendations blindly based on a research analyst’s recommendation.
Continue to learn about more candlestick patterns to see how it can greatly improve your profits! Primary candlestick patterns should be understood first (such as the doji and hanging man patterns). Once you have a basic understanding of the primary signals, move onto the secondary candlestick signals and then eventually the continuation pattern such as this upside tasuki gap pattern.
