The Stick Sandwich Interpretation

While analyzing technical charts, whether in a bear or in a bull market, have you ever stumbled on a pattern that looks like a sandwich? You know, 3 candles: 1 at the middle and the 2 that are located on both sides. The set doesn’t simply show up to remind you of food; in fact, it shows up to indicate a trend – and a profitable one!

Technically, the said pattern is known as the Stick Sandwich in the foreign exchange market.

What Is the Stick Sandwich?
The Stick Sandwich is a technical trading pattern that resembles a sandwich; it was developed by the internationally recognized trader, Thomas Bulkowski. It is composed of 3 candles; 1 is engulfed by 2 similarly colored candles. When compared to the external candles, the middle candle has a relatively small trading range. 

Moreover, the Stick Sandwich draws light on the formation of support and resistance levels in the Forex market. It follows that other than point out strong and weak market conditions, it distributes hints with regard to particular closing prices.

Points to remember:
  • Continuations are more likely to occur on the 3rd of the year’s lowest price
  • It can produce a signal for a downward retrace in an uptrend
  • It can produce a signal for an upward retrace in a downtrend
  • Reversals can be detected from  the position of the closing price

It’s all about Perspective
As mentioned, the Stick Sandwich can appear in any given market condition; it can be identified in a bearish market, as well as in a bullish market. It is said that if there’s a small, red candle on the middle, and it is surrounded by 2 long, green candles, you are trading in a bear market. If you are in such a trading environment, you are more likely to participate in a downtrend.

Conversely, the Stick Sandwich can appear in a bull market where price action goes in line with positive trading behavior; since the prices are up and rising, pursuing the ongoing uptrend seems best. Particularly, if the middle candle is the short, green candle, which is located between 2 long, red candles, you’re said to be on bullish conditions.

According to the Analysts
For many analysts, the Stick Sandwich has a questionable reliability; while it can sometimes show trend reversal, it can also lead to trend continuation. On most instances, you’re left uncertain of what it indicates. Although it can be used to establish support and resistance levels, it can yield two-ended results. It is, therefore, recommended to await price confirmation.