Advance Block

DEFINITION of 'Advance Block'

The advance block is a three-candle bearish reversal pattern appearing on candlestick charts, although, in practice, it frequently leads to a bullish continuation.

BREAKING DOWN 'Advance Block'

The advance block pattern is a bearish reversal pattern, where:

  1. The market is in an uptrend;
  2. Three white candles have progressively shorter real bodies;
  3. The open of the second and third candle should be within the real body of the previous candle;
  4. And, the shadows of the three candles gradually become taller – especially the upper shadows of the last two candles.

The chart pattern performs best during temporary uptrends within a larger downtrend when candles have long real bodies. The bearish reversal is confirmed when the proceeding candle’s price overcomes the midpoint of the first candle’s real body.

In practice, the advance block pattern is relatively rare to come across and actually leads to a bullish continuation more frequently than a bearish reversal.

Traders shouldn’t place much trust in the advance block alone and instead use it as a confirmation for other chart patterns or technical indicators that may be more reliable. In addition, traders should be sure to look for tall real bodies to maximize the odds of success since they tend to be a better predictor of an upcoming reversal.