Bullish Counterattack Line (Increasing counterattack) is a reversal pattern of 2 candlesticks with quite unexpected psychological movements. This cluster of 2 candles is likely to appear on the daily chart or when the price moves quickly at market times. Combining the Bullish Counterattack Line with other technical signals will help you find where the trend is exhausted and ready to reverse.

What is the Bullish Counterattack Line?

Bullish Counterattack Line (Bullish Counterattack Line) is a cluster of 2 reversing candles, appearing in a downtrend. These two candles are opposite in color but have the same closing price, forming a “counterattack line”, signaling the trend may reverse from decreasing to rising.

Opposite to the Bullish Counterattack Line is the Bearish Counterattack Line, reversing from up to down. Characteristics and usage of these two models are similar but in the opposite direction.

Features of the Bullish Counterattack Line

The Bullish Counterattack Line model has the following identifying characteristics:

  • Appears in downtrend
  • The first candle must be a bearish candle
  • The second day candle must create a gap when opening.
  • The second day is a bullish candlestick and closes at the close of the first day.

Because the Bullish Counterattack Line requires a gap (gap) on the second candlestick, this pattern is rarely seen on forex charts at short time frames that usually appear on the upward frame, or when the market moves. move too fast at the moment of breaking news.

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This pattern is of medium confidence, which will exert additional strength if the candles have a long body, especially a second one.

Psychological movement of Bullish Counterattack Line model

Psychological evolution of Bullish Counterattack Line model is expressed through two words: “Surprise”. In a downtrend, the selling side is dominant and creating a large bearish candle. Not only that, in the next session, the price also jumped down and opened at a low level.

At this point, many traders will feel the market's bearish force is very strong. But unexpectedly, the buyer countered and pushed the price up, closing at the same level as the previous session.

In the end, the sellers did not make any profit at the second candle. Besides, those who entered the sell order right below will feel confused and scared. When they cut losses, prices will get support to rise.

Actual example of Counterattack Line model

Below is an actual example of the Bullish Counterattack Line model on the EURUSD chart, frame D1.

As you can see, the Bullish Counterattack Line has appeared right at the bottom of the downtrend. The pattern starts with a fairly strong long bearish candle and ends with an upward candlestick, the closing prices of the two candles are equal. After the model was completed, EURUSD reversed from falling to rising.

Guide to trading with Bullish Counterattack Line model

We will guide trading the Bullish Counterattack Line model with the 30-minute chart example of GBPUSD. In the illustration below, the Bullish Counterattack Line pattern appears in the middle of the chart, marked with a blue arrow.

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Entry point command

In this example, the initial trend is bearish, two candles of the Bullish Counterattack Line pattern have a relatively high height compared to the previous candles. So the elements of this counterattack candlestick pattern are all there. However, you should not enter as soon as you see the pattern complete because the signal of this candle is not strong. Instead, be patient with the following steps:

  • Wait for the price to continue falling further
  • Watch the height of the candles behind that to see when the trend is getting weaker
  • As prices continue to fall deeper, look for other confirming signals such as divergence
  • If there is more confirmation signal, place a pending order to buy at the opening price of the first candle in Bullish Counterattack Line model.

Entering this order requires patience and discipline. This method increases the safety and certainty when dealing with candlestick models not as strong as the Bullish Counterattack Line.

Stop loss

The stop should be placed just below the tail of the second day of the pattern. If the market goes up, move the stop loss to a breakeven point to ensure safety.

Take profit with Counterattack Line model

Profit-taking points are set at strong resistances. If the market starts to move up in the right direction, you can increase your position and take profit taking even higher.

Epilogue

Because the reversal signal of the Bullish Counterattack Line model is not as strong as many other models, so when trading, you need to be patient and wait for the opportunity as well as maintain the discipline of trading. In particular, combine the Bullish Counterattack Line with other trading indicators to increase the R: R ratio and the probability of winning in each trade. Good luck!

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Author: Tin Nguyen

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