Recently, I’ve been reviewing some short-term trading patterns and found that the sandwich candlestick pattern really deserves more time to understand. It’s not something complicated, but it’s quite powerful in execution.

The basic logic is simple: three candlesticks, with the middle one moving in the opposite direction and sandwiched between the two. It sounds a bit abstract, but once you see it on a chart, it’s hard to miss.

The bullish scenario looks like this: a downward trend with two falling candlesticks, with an upward candlestick inserted in the middle. This pattern usually appears near the end of a downtrend or close to a support level. Your entry point is when the price breaks above the high of the middle candlestick. Place your stop loss below the lowest point among the three candlesticks. For the target, you can calculate it by adding the overall height of the three candlesticks to your entry price.

Conversely, the bearish sandwich candlestick pattern involves two rising candlesticks with a falling candlestick in the middle, often appearing near the end of a rebound or at a resistance level. The entry signal is when the price breaks below the low of the middle candlestick. Set your stop loss above the high point, and the profit target can be calculated by subtracting the height of the three candlesticks from your entry price.

The reason this pattern is effective lies in the middle candlestick that gets sandwiched. It indicates that the original trend momentum has resumed, and the short-term counter-movement lacks strength. This provides a fairly confident entry point. At the same time, the range of the three candlesticks directly offers reference points for your stop loss and target.

In actual trading, I find that the most useful aspect of the sandwich candlestick pattern is its certainty. Once the pattern is confirmed, your risk management becomes very clear, and there’s no need to guess. Of course, like all technical patterns, it’s more reliable when combined with other indicators or confirmed by larger trend analysis.