Separating Lines

Appearance: In an up-trend a large black (red) bodied candle followed by large white (green) bodied candle where the open of each of the candles is the same or there is a gap.

Criteria: Separating Lines have a large-bodied candle with the first going against the trend and the second candle with the trend.

Effect: Separating Lines are a strong continuation signal.

Note: In candlestick descriptions, "white (green)" refers to an up-bar, and "black (red)" refers to a down-bar. Individual traders prefer different bar colors. For example, we personally trade with candles set to green for up and red for down. (TradeStation defaults their Candlesticks to this color convention.) Most related textbooks use white (or green, if color is used) for up and black (or red) for down.