Stick Sandwich Pattern – Bearish Reversal

Definition

The Stick Sandwich is a bearish reversal candlestick pattern consisting of three candles: a long bullish candle, a bearish candle whose body is fully inside the first candle's body, and another long bullish candle that closes near or below the first candle's close. The shape resembles a sandwich with the bearish candle trapped between two bullish ones.

How to Identify

• Candle 1: Long bullish candle with a large body and small or no wicks.
• Candle 2: Bearish candle whose open and close are both within the body of candle 1.
• Candle 3: Long bullish candle closing near or below the close of candle 1, indicating failed continuation.
• The pattern appears after a clear uptrend.

How to Trade

• Entry: After candle 3 closes, place a sell stop order below the low of candle 3 or below the low of candle 2.
• Stop Loss: Set above the high of candle 3 or above the high of candle 1 (whichever is higher).
• Take Profit: Use support levels or Fibonacci extensions (e.g., 100% of the pattern's height).
• Confirm with declining volume on candle 3.

Real Example

On the H4 chart of EUR/USD, after a 150-pip rally, a Stick Sandwich appeared: candle 1 bullish (1.1050-1.1080), candle 2 bearish inside (1.1060-1.1070), candle 3 bullish but closed at 1.1075 (near candle 1 close). The price then dropped 80 pips over three days.

Common Mistakes

• Entering before candle 3 closes – premature entry.
• Ignoring the trend context: the pattern is only valid in an uptrend, not in a sideways market.
• Confusing with Three White Soldiers (three strong bullish candles in a row) – the key difference is that Three White Soldiers have no bearish candle sandwiched in between.