Thrusting Pattern

The thrusting pattern is a bearish candlestick continuation pattern, although there’s plenty of evidence it can also generate a bullish reversal. The pattern is formed when a black candle is followed by a white candle that meets certain criteria.

The thrusting pattern occurs when a black candle is followed by a white candle. While these candles may look like the in neck and on neck chart patterns, the thrusting pattern occurs when the white candle closes above the black candle’s close but below its real body midpoint.

The thrusting pattern occurs when bulls attempt to intervene in a predominantly bear market – evidenced by the white candle following a protracted downtrend. The failure to break out above the prior candle’s midpoint suggests that bulls lack the strength to reverse the trend. As a result, the downtrend is likely to continue as bulls give up their rally attempt.

Statistical analyses of the thrusting pattern have shown that it also leads to a bullish reversal. In some cases, the bullish reversal is more common than the bearish continuation. Given this conflict, traders shouldn't place too much faith in the chart pattern as a standalone trading signal and analyze the pattern in conjunction with other forms of technical analysis.

The market is engaged in an active downtrend or a pullback within an active uptrend. The security loses ground for a number of sessions, increasing bearish confidence while placing bulls on the defensive. It posts a new low in the first candle, opening near the intraday high and closing near the intraday low while printing a large real body. This price action causes bears to become complacent while bulls grow despondent. The security gaps down on the second candle, adding to bearish complacency, but then reverses. Bull power increases when the security lifts back above the closing print, leaving a small lower shadow, and increases once again when the rally penetrates the closing print of the first candle. 

However, the rally fails to cross the midpoint of the first candle, exposing limited buying interest price action on the third or fourth candle may then determine a continuation or a reversal. An initial continuation signal goes off if the security reverses below the midpoint of the first candle and sells off through the closing print of that candle. Conversely, an initial reversal signal goes off if the security continues to gain ground, lifting above the opening print of the second candle.