Bullish Belt Hold is a single candlestick pattern basically a White Opening Marubozu that occurs in a downtrend. It opens on the low of the day and then a rally begins during the day against the overall trend of the market which eventually stops with a close near the high leaving a small shadow on top of the candle. If longer bodies characterize the Belt Hold then the resistance they offer against the trend will be even much stronger.
1. The market is characterized by a prevailing downtrend.
2. The market gaps down and opens at its low and closes near to the high of the day.
3. A long white body that has no lower shadow (a White Opening Marubozu) is observed.
Pattern Requirements and Flexibility
A White Opening Marubozu or a White Marubozu (with no upper or lower shadow) should be seen in a Bullish Belt Hold and it should open lower than the two preceding black candlesticks.
The market opens lower with a significant gap in the direction of the prevailing downtrend. So the first impression reflected in the opening price is the continuation of the downtrend. However after the market opening things change rapidly and the market moves in the opposite direction from there on. This causes much concern among the short traders leading to the covering of many positions which could reverse the direction of the trend and start a rally for the bulls.
Buy/Stop Loss Levels
The confirmation level is defined as the last close. Prices should cross above this level for confirmation. The stop loss level is defined as the last low. Following the BUY if prices go down instead of going up and close or make two consecutive daily lows below the stop loss level while no bearish pattern is detected then the stop loss is triggered.