BELT-HOLD LINES

The belt hold is an individual candlestick line which can be either bullish or bearish. The bullish belt hold is a strong white candlestick which opens on the low of the day (or with a very small lower shadow) and moves higher for the rest of the day. The bullish belt-hold line is also called a white opening shaven bottom. If, as in Exhibit 6.25, the market is at
a low price area and a long bullish belt hold appears, it forecasts a rally.

The bearish belt hold (see Exhibit 6.26) is a long black candlestick which opens on the high of the session (or within a few ticks of the high) and continues lower through the session. If prices are high, the appearance of a bearish belt hold is a top reversal. The bearish belt-hold line is sometimes called a black opening shaven head.

The longer the height of the belt-hold candlestick line, the more significant it becomes. Belt-hold lines are also more important if they have not appeared for a while. The actual Japanese name for the belt hold is a sumo wrestling term: yorikiri. It means “pushing your opponent out of the ring while holding onto his belt.” A close above a black bearish belthold line should mean a resumption of the uptrend. A close under the white bullish belt-hold line implies a renewal of selling pressure.

Exhibit 6.27 shows how bullish belt-hold line 1 signaled a rally. Belthold line 2 is interesting. It confirmed a tweezers bottom since it maintained the prior week’s lows. A rally ensued which ended with a harami a few weeks later

The shooting star was the first sign of trouble in Exhibit 6.28. The next session’s bearish belt-hold line confirmed a top. Another bearish belt hold during the following week reflected the underlying weakness of the market.

Exhibit 6.29 is an example of back-to-back bearish belt holds in mid-February. The selloff which ensued, was sharp, but brief as a bullish morning star pattern spelled a bottom.