Bullish Counterattack Line Candlestick Pattern

The bullish counterattack line or bullish meeting line is a two candlestick pattern that occurs after a downtrend and is considered a bottom reversal signal. The bullish counterattack line is a less significant bottom reversal signal than the quite similar piercing pattern. The first candlestick is a bearish candlestick. The second candlestick opens far below the close of the first day’s bearish candlestick but then rallies back, closing at roughly the same price as the first day’s candlestick closing price. Therefore, the second day candlestick is a large bullish candlestick. The large gap down on the second day gives bears confidence that the downward trend will continue; but to the surprise of bears, rather than heading further down, prices reverse and fill the gap and close at the same price level of the previous day’s close. The bears gained no ground that day.

Bearish Counterattack Line Candlestick Pattern

In contrast, the bearish counterattack line or bearish meeting line is a two candlestick pattern that occurs after an uptrend and is considered a top reversal signal. The bearish counterattack line is a less significant top reversal signal than the related dark cloud cover pattern. The first candlestick is a bullish candlestick. The second candlestick opens far above the close of the first day’s bullish candlestick but then retreats, closing at roughly the same price as the first day’s candlestick closing price. Thus, the second day candlestick is a large bearish candlestick. The large gap up on the second day gives bulls confidence that the upward trend will continue; but to the surprise of bulls, rather than moving ever higher, prices reverse downward and fill the gap and close at the same price level of the previous day’s close. The bull gained no ground that day.

Bullish Counterattack Line Candlestick Chart Example

A bullish counterattack line is shown on the chart above of the Financial SPDR ETF (XLF). The first day of the bullish counterattack line was a long bearish candlestick. The next day, prices gapped down, but the bulls were able to push prices to the same price level as the close of the bearish candlestick. If a trader were to combine the candlesticks of the second day of the bullish counterattack line with the following day candlestick, the combined candlestick would make up the second day of a piercing pattern that penetrated more than two-thirds of the way into the bearish candlestick on the first day.

Bearish Counterattack Line Candlestick Chart Example

A bearish counterattack line is shown on the chart above of Exxon Mobil (XOM). A multi-week uptrend precedes the bearish counterattack line pattern. A bullish candlestick is followed by a large gap up; however, the bulls are unable to maintain prices at or above the opening price and the bears end up bring prices down to the prior day’s closing price. After the bearish counterattack line, nine bearish candlesticks followed.

Works Referenced

1. Nison, S. (2003) The Candlestick Course. Hoboken: John Wiley & Sons.
2. Nison, S. (1994) Beyond Candlesticks: New Japanese Charting Techniques Revealed. New York: John Wiley & Sons.
3. Nison, S. (1991) Japanese Candlestick Charting Techniques. New York: New York Institute of Finance.
4. Rhoads, R. (2008) Candlestick Charting For Dummies. Hoboken: Wiley Publishing.
5. ThinkorSwim. (2011). ThinkorSwim Resource Center: Candlestick Patterns Library.