The belt hold line is basically the white marubozu and black marubozu within the context of a trend. The bullish belt hold candle opens on the low of the day and closes near the high. This candle presents itself in a downtrend and is an early sign that there is a potential bullish reversal. Conversely the bearish belt candle opens at the high of the day and closes near the low. This candle presents itself in an uptrend and is an early sign that there is a potential bearish reversal. These candles are reliable reversal bars, but lose their importance if there are a number of lines in close proximity.

Bullish Belt Hold Line

The bullish belt hold line gaps down on the open of the bar, which represents the low of the bar, and then rallies higher. Shorts who entered positions on the open of the bar are now underwater, which adds to the buying frenzy. Traders can enter long positions when the high of the bullish belt hold candlestick is exceeded. You can place your stop loss order under the low of the bullish belt hold candlestick.

Bearish Belt Hold Line

The bearish belt hold line gaps up on the open of the bar, which represents the high of the bar, and then sells off. Longs who entered positions on the open of the bar are now in losing positions, which adds to the selling frenzy. Traders can enter short positions when the low of the bearish belt hold candlestick is exceeded. You can place your stop loss order above the high of the bearish belt hold candlestick.

Al Hill is the co-founder of mysmp.com (My Stock Market Power) which provides free trading articles to investors.

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