Bullish Counterattack Line

The Bullish Counterattack Line is composed of two candlesticks of opposite colour with the same closing price.

It is a not-so-powerful reversal pattern that is significant over all time units.

Its characteristics are as follows:

• The Bullish Counterattack Line must appear after a downtrend.

• The body of the 1st candlestick is red and preferably powerful.

The 2nd candlestick must be green, it should preferably open gap down and close at almost the same level as it did the day before.

Such a pattern appears after a downtrend, the day after losses happened, when prices open gap down while bearish forces dry up and prices rise before finally closing at almost the same level as they did the day before. This forms a long green Japanese candlestick. The trend remains bearish but stakeholders who were positioned lower start to doubt the strength of the trend since prices have not stayed at their lows despite the strong gap down.

Traders grow impatient and their stops often become more frequent in order to protect their gains. Some contrarian traders begin to position themselves. If prices rise again the day after, the trend is likely to reverse what would validate the pattern. In this example, the day after opens gap up, what launches a new uptrend.

The longer the Japanese candlesticks and the wider the gap, the more significant the pattern is. A Bullish Counterattack Line still remains less powerful than a Bullish Piercing Line or a Bullish Engulfing.

Regardless of the quality of the Counterattack Line, it is wiser to wait for the confirmation of the pattern by the next Japanese candlestick that should be bullish. Other signals can reinforce this pattern. It can appear above a previous support for example.

The invalidation threshold can be placed below the lowest point of the pattern.