Advance Block

The Advance Block is an end-of-trend pattern composed of three green Japanese candlesticks.

It reveals an overheated state in a rise with a consolidation risk. It is significant over all time units.

Its characteristics are as follows:

• All three Japanese candlesticks must be green.

• Each candlestick must open close to the previous close (no wide gap)

• The last or the last two candlesticks should not close near the highs, there are buying shadows.

• The bodies of the candlesticks grow shorter as the pattern unfolds.

On this chart, we observe an Advance Block around 4050 pts.

Prices form a long green candlestick and rise again over the next few days but the candlesticks start to show some weaknesses.

Buying shadows start appearing since prices are not closing on the highs of the session. Moreover, the candlesticks grow significantly smaller which truly reveals that the trend is running out of steam.

At this time, the trend is not sound anymore and it can be interesting to place more stops in order to protect the gains one made during the rise. A bearish Engulfing occurs and launches a correction phase.

One will be able to come back on a lower position when the situation is sound again, as it happens in this example after the supports have returned at 3850 pts.

An Advance Block cannot be used to enter on short position; it is no true reversal signal. It merely is a hint that can allow you to take some gains close to the highs.