Bullish Belt Hold Candlestick Pattern

The bullish belt hold is a Japanese candlestick pattern that makes $25.50, $4.60, and $30.00 in the crypto, forex, and stock markets, respectively, on average per $100 risked.

Pretty good, right?

But what if I told you that there’s an even better way to trade this bullish candlestick pattern?

Would you be interested?

Keep going if you want to know how to trade bullish belt hold patterns in a data-driven, money-making way.

What Is a Bullish Belt Hold Candlestick Pattern?

Bullish Belt Hold Candlestick Pattern Illustration

The bullish belt hold is traditionally traded as a bullish reversal pattern. The name allegedly comes from a samurai holding up his pants using the handle of his belt. 

While the veracity of the backstory can be debated, how to trade this pattern in the most profitable way based on history cannot.

But before we learn how to trade this pattern optimally, .et’s get a better understanding of this candle’s price action rules.

How to Identify the Bullish Belt Hold Candlestick Pattern

Bullish Belt Hold Candlestick Identification (AAPL)

The following are the requirements for a valid bullish belt hold pattern:

  • The candlestick must be bullish with a long real body.
  • There must be no or tiny lower shadow.
  • The pattern must occur during a downtrend.

As mentioned above, the pattern often has a short upper shadow that can be held.

We can see the potential bottom reversal pattern on Apple’s (AAPL) daily chart on October 5th, 2021. The price action is in a downtrend as it’s below the fifty-day moving average. The opening price is near or at the low of the day, with the closing price significantly above it, giving us a long real body. 

The high is above the closing price, giving us the bullish handle. With the belt hold signal identified, what’s the best trading strategy for these bullish belt hold patterns?

Let’s find out!

How to Trade the Bullish Belt Hold Candlestick Pattern

The bullish belt hold should be traded as a bearish continuation expecting the prevailing downtrend to continue with an optimal risk-reward ratio of 1:5.

In other words, following the crowd during your trading session is typically a recipe for disaster.

But before we dig into how profitable traders handle belt hold trades, let’s look at the traditional trading method.

Bullish Belt Hold Bullish Reversal Trade Setup

Bullish Belt Hold Bullish Reversal Trade Setup (MSFT)

First, we need to validate and identify the bullish belt hold candle. We can see the candle pattern on the Microsoft (MSFT) daily chart on May 20th, 2021. 

We see that the price is below the fifty-day moving average, which we’re using as our trend lines to determine an uptrend or downtrend.

We identify the belt hold rising candle pattern with the open being near the low of the day with almost no lower shadow and the high being above the close. 

With the bullish belt hold identified, what’s the traditional trading strategy?

Traders go long at the break of the belt hold candle high, and stop out with a break below the candle’s low.

And while this pattern does produce profits, as it did with the Microsoft daily chart above, there’s a better way to trade it.

Bullish Belt Hold Bearish Continuation Trade Setup

Bullish Belt Hold Bearish Continuation Trade Setup (TDG)

We can see the bullish belt hold pattern on the TransDigm (TDG) daily chart on August 27th, 2021. Investor sentiment is negative as the price is below the fifty-day moving average. We then see the belt hold single candlestick pattern with a small or no shadows and a tiny upper shadow that can act as a belt handle.

With the pattern identified, data-driven traders go short at the break of the belt hold bar close with a stop loss above the high. 

Using the TrandDigm example, a data-driven trader would have gone short on August 30th, 2021, at the trading session open.

Does the Bearish Belt Hold Candlestick Pattern Work? (Backtest Results)

Using the following rules, I backtested the bearish belt hold patterns on the daily timeframe in the crypto, forex, and stock markets.

  • A close above the 50-day SMA constitutes an uptrend.
  • I tested risk-reward ranges from 1 to 5. 
  • The optimal risk-reward ratio is selected using profit per bar.
  • Entry and exits are discussed in the how-to trade section above.
  • Confirmation must occur within three days of the pattern signal.

Bullish Belt Hold Bullish Reversal Backtest Results

cryptoforexstock
pattern_namebullish belt holdbullish belt holdbullish belt hold
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars111
required_trenddowntrenddowntrenddowntrend
traded_asbullish reversalbullish reversalbullish reversal
stop_bar_typelowlowlow
entry_bar_typehighhighhigh
risk_reward545
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers24912806466
patterns705691937389915
trades409360156276554
confirm_perc0.580.650.71
wins8561256859619
losses323747588216935
win_perc0.2090.2090.216
avg_win_bars29.0837.6736.54
avg_loss_bars10.1317.6312.45
cons_wins377
cons_losses2410930
edge0.2550.0460.3
cryptoforexstock
pattern_namebullish belt holdbullish belt holdbullish belt hold
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars111
required_trenddowntrenddowntrenddowntrend
traded_asbullish reversalbullish reversalbullish reversal
stop_bar_typelowlowlow
entry_bar_typeclosecloseclose
risk_reward521
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers24912806466
patterns6850107870526610
trades529885790447815
confirm_perc0.770.80.85
wins113630552251438
losses416255238196377
win_perc0.2140.3560.561
avg_win_bars22.3810.392.06
avg_loss_bars8.148.732.57
cons_wins39817
cons_losses224410
edge0.280.0720.121

Bullish Belt Hold Bearish Continuation Backtest Results

cryptoforexstock
pattern_namebullish belt holdbullish belt holdbullish belt hold
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars111
required_trenddowntrenddowntrenddowntrend
traded_asbearish continuationbearish continuationbearish continuation
stop_bar_typehighhighhigh
entry_bar_typelowlowlow
risk_reward355
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers24912806466
patterns7140112930417286
trades271638423170792
confirm_perc0.380.340.41
wins501603622496
losses221532387148296
win_perc0.1840.1570.132
avg_win_bars25.5237.8931.53
avg_loss_bars12.7110.5510.73
cons_wins103349
cons_losses186169
edge-0.268-0.055-0.21
cryptoforexstock
pattern_namebullish belt holdbullish belt holdbullish belt hold
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars111
required_trenddowntrenddowntrenddowntrend
traded_asbearish continuationbearish continuationbearish continuation
stop_bar_typehighhighhigh
entry_bar_typeclosecloseclose
risk_reward555
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers24912806466
patterns7507143606516980
trades6598115006455278
confirm_perc0.880.80.88
wins209448465122601
losses450466541332677
win_perc0.3170.4210.269
avg_win_bars3.431.892.74
avg_loss_bars5.822.031.99
cons_wins148224167
cons_losses313536
edge0.9051.5250.615

Bullish Belt Hold Mean Reversion Backtest Results

cryptoforexstock
pattern_namebullish belt holdbullish belt holdbullish belt hold
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars111
required_trenddowntrenddowntrenddowntrend
traded_asbearish mean reversionbearish mean reversionbearish mean reversion
stop_bar_typeatratratr
entry_bar_typepattern_highpattern_highpattern_high
risk_reward111
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers24912806466
patterns8845136128517984
trades431763805292785
confirm_perc0.490.470.57
wins246941220170682
losses184822585122103
win_perc0.5720.6460.583
avg_win_bars4.035.853.93
avg_loss_bars4.277.815.19
cons_wins3093104
cons_losses5719
edge0.1420.2960.163
cryptoforexstock
pattern_namebullish belt holdbullish belt holdbullish belt hold
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars111
required_trenddowntrenddowntrenddowntrend
traded_asbullish mean reversionbullish mean reversionbullish mean reversion
stop_bar_typeatratratr
entry_bar_typepattern_lowpattern_lowpattern_low
risk_reward111
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers24912806466
patterns8655144722528860
trades295537947189302
confirm_perc0.340.260.36
wins182523426119590
losses11301452169712
win_perc0.6180.6170.632
avg_win_bars5.782.873.39
avg_loss_bars5.894.764.54
cons_wins132819
cons_losses6116
edge0.2380.2370.262

Similar Candlestick Patterns

Multiple candlestick patterns are often confused with the bullish belt hold. It’s critical to understand the differences when using candlestick pattern technical analysis.

Bearish Belt Hold vs. Bullish Belt Hold Candlestick Pattern

The bearish belt hold and the bullish belt hold patterns are highly similar. Both are considered reversal patterns, with the bearish belt hold occurring in an uptrend while the bullish belt hold occurs in an uptrend. Also, their wicks and price action are reversed.

The bullish belt hold has a short upper wick, while the bearish belt hold has a short lower shadow.

Bearish Closing Marubozu vs. Bearish Belt Hold Candlestick Pattern

The bearish closing marubozu candle is another single candlestick pattern. The only difference between these two candlesticks is where the wicks are located.

The bearish closing marubozu has no lower shadow and a small upper shadow, whereas the bearish belt hold has no upper shadow and a small lower shadow.

The Bottom Line

The bullish belt hold pattern is a frequently occurring single candlestick pattern. The data shows that the pattern works better as a continuation than the traditional recommended reversal trading strategy. 

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