A classic example of the bearish Belt Hold candlestick pattern from Kimco Realty (KIM)
This pattern is formed with a very big gap away from the current uptrend. It opens at its high and immediately backs off for the rest of the day.
As you can see from the chart above, this counter gap up severely at the open on 27 Sep but went down all the way for the day. This shows that there are no more buyers who are willing to go in at a higher price to push the price further up and short sellers start to enter.
Another signal that the counter is telling us that it is going down is from the 20-day moving average. It was somewhat near the MA already. In the current bearish market, many counters have difficulty breaking past the 20d MA which acts as a resistance.
Stochastic is not showing an overbought reading when the belt hold candlestick pattern was formed. But take note that recently history showed that when the readings were only about ~50, it also went down. The same thing could happen again and very likely as well.
Yes… I entered a short position, before the closing, on that bearish belt hold day. As of now, I am still holding the short position. The stochastic fast line (%K) has just cut the slow line (%D). Quite possible that it could went down further as the downward momentum is strong. But nothing is certain. I adjusted my stop loss along the way and set it at the last day opening price.