Rising Window Candlestick Pattern – Psychology and Trading Strategies

Rising Window Candlestick Pattern: In the world of the stock market, every movement in price is due to a reason and every movement gives an indication. There are few candlestick patterns which when formed give a certain indication of future movement. These candlestick patterns are important tools for technical analysts to predict the future movement of prices.

This article will explore the Rising Window Pattern, a two-candlestick pattern, covering its features, details, and trading strategies associated with it.

Rising Window Candlestick Pattern – Definition

The Rising Window Candlestick pattern is a two-candlestick pattern that strongly indicates the bullish movement of the price. A two-candlestick pattern is only called a rising window pattern if both the candlesticks are bullish candles and there is a gap between the two candlesticks. Meaning, that the second candle’s low should be higher than the high of the first candle. 

The rising window candlestick pattern is generally used for bullish continuation indication. If it appears in an uptrend it generally indicates the continuation of a bullish momentum. So its appearance gives traders an indication to buy the security and hold onto it if they have already bought it.

Rising Window Candlestick Pattern – Formation

Two conditions need to be filled for a two-candlestick pattern to be formed as a rising window pattern:

Condition 1- Both candles need to be bullish (green) candles.

Condition 2- There should be a gap between the two candles. That is, the low of the second candle should be higher than the high of the first candle.

A rising window pattern is formed quite often in the market in an uptrend but this pattern can also appear during a downtrend. However, it is generally used to get a bullish continuation indication in the security.

Rising Window Candlestick Pattern – Psychology

In an uptrend, the first candle formed is a green candle due to buyers being in control of the market. The second candle opens with a gap up because of the high buying pressure where buyers are willing to buy the security at higher prices. 

In this candle formation, the buying pressure is so high that the second candle’s low price doesn’t even come near the high price of the first candle. Due to the formation of the rising window, it forms a positive outlook and more buyers might see this as a potential buying zone. This is why the price generally moves higher after the formation of a rising window pattern. 

Key Characteristics of Rising Window Candlestick Pattern 

1. The two candles formed are bullish candles (green candles) with a gap between the high price of the first candle and the low price of the second candle.
2. The gap between the two candles acts as a support zone.
3. This pattern indicates a bullish continuation when it appears during an uptrend

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Rising Window Candlestick Pattern – Trading Strategies

Before the appearance of this pattern, traders should ensure that the previous trend must be an uptrend. Once this pattern is formed, the following are the trade details- 

• Entry – After the formation of the candlestick pattern, traders can take a long position at or just above the close price of the second candle.

• Profit Target – Traders can exit the trade when the price of the security reaches near the immediate resistance zone. Once this level is reached, partial profits can be booked in the trade can be booked and the remaining position can be held until the next resistance level.

• Stop loss – The stop loss should be placed right below the ‘gap’. Meaning, the stop loss needs to be placed near the close price of the first candle.

Example Of Rising Window Candlestick Pattern

The image shown above is the chart of TATA CONSULTANCY and the time frame is one day. We can observe the rising window pattern at an uptrend. The formation of this pattern indicated the continuation of the bullish momentum. We can also see that the ‘gap’ perfectly acted as the support zone. 

Traders could have taken a long position at Rs. 2705.80 and the stop loss was at Rs. 2523.45

Conclusion

In this article, we discussed one of the most frequently appearing candlestick patterns- the rising window pattern. Traders should not be taking a trade just based on this pattern but must also use other indicators before taking a trade. We have discussed what a rising window pattern is, its meaning, formation, psychology behind its formation, and how to take a trade.

It is necessary to place a stop loss as it will minimize the losses in cases where the market moves against our analysis. What are your views about this article, please let us know in the comment section.

Written By Praneeth Kadagi

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