Line Of Separation

The Line of Separation is a continuation pattern composed of two Japanese candlestick of opposite colours.

It is significant over all time units.

The characteristics of the Bullish Line of Separation are as follows:

• The 1st candlestick is red.

• The 2nd candlestick is green and opens at the same level as the previous bearish candlestick.

• The green candlestick should ideally have no lower shadow (or a very short one, if any).

On this chart, after a price stability zone, prices form a long green candlestick and go on rising over the next two days but weaknesses are starting to show in the candlesticks.

A Bearish Belt Hold appears and might lead us to think that prices are not going to get over 3900 pts as they did before. The day after, prices open gap up and rise all day long which creates a Line of Separation and invalidates the bearish scenario. The 3900 pts resistance has been overcome which gives prices an opportunity to start a new bullish rise.

Bearish Lines of Separation also exist, where a long green candlestick and a red candlestick that opens at the same level as the previous candlestick thanks to the gap down, appear in a downtrend.

These Bearish Lines of Separation invalidate the bullish reversal that was forming and they pave the way to a new fall.