Bullish Belt Hold

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The bullish belt hold is a stock maket reversal signal. It consists of only 1 candlestick, but should occur after a downtrend in the markets.

The stock starts off in a downtrend. One day the stock gaps down at the open. But instead of going lower the stock rises and goes a significant amount higher then it’s open. The stock also should not have much if any downward shadow. It is ok to have a little bit of an upward shadow.

Why does the bullish belt hold work? When the stock gaps down and starts heading up it signals the bulls are saying enough is enough. When it closes high above the open it conferms this theory.