What it looks like
Bullish: in a rise, a down candle, then a long up candle that opens at about the same price the down candle opened and closes well above it. Bearish: in a fall, an up candle, then a long down candle that opens at about the same price the up candle opened and closes well below it. The two candles share an opening price but move in opposite directions, so they look separated.
What it means
The first candle is a pause against the trend. The second candle wipes that pause out from its very first trade: buyers (in a rise) or sellers (in a fall) came straight back at the same opening price. It says the trend is still in charge and the pause was only a rest. In a sideways market it means nothing, because there is no trend to continue.
Bullish and bearish versions
How to trade it
- 1
Confirm the trend first: higher highs and higher lows for the bullish version, lower highs and lower lows for the bearish one. Skip it in a sideways market.
- 2
Bullish: buy when price closes above the pattern's high. Bearish: sell when price closes below the pattern's low.
- 3
Example: in a gold uptrend on the 1 hour chart, bullish separating lines spans 14 points; a close above its high is the buy.
- 4
Put the stop just beyond the other end of the pattern: below its low for a buy, above its high for a sell (about 14 to 15 points in that example).
- 5
Aim for the next swing level in the trend's direction or 2 times the stop.
Bullish: a close below the pattern's low. Bearish: a close above the pattern's high.
Where it works best
In a clear trend on 1 hour and higher charts, on a pullback that has not broken the trend's last swing point. It needs an open that differs from the prior close, so it shows more in markets that gap, such as indices at the session open.
WickSpeak finds the separating lines pattern automatically on any chart and names it on the candles that made it. Next to the name it writes what the pattern is, how to trade it and what proves it wrong, in plain English. In Playbook you can use the separating lines pattern, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, then backtest it on past candles with your own costs.
Common mistakes
- Trading it against the trend as if it were a reversal.
- Using it in a sideways market where it means nothing.
- Entering on the second candle before price closes beyond the pattern's high or low.
Related patterns
Questions traders ask
Is separating lines a reversal or a continuation pattern?
It is a continuation pattern. It says the trend is still in charge after a one candle pause, so you trade it in the trend's direction only.
How do you trade bullish separating lines?
In a rise, buy once price closes above the pattern's high and place the stop just below its low. A close below the low proves it wrong.
Why does separating lines rarely appear on gold or forex?
The second candle must open well away from the first candle's close, back at the first candle's open. In markets that trade around the clock candles usually open at the last close, so the shape needs a gap.
Does separating lines work in a range?
No. Without a trend there is nothing to continue, so in a sideways market the pattern means nothing.