Upthrust Bar

An Upthrust bar is a wide range bar seen during an up-trend when price makes a new high and closes strongly down on high volume. This bar could be compared to Bearish Engulfing candlestick chart pattern.

Mechanics behind an Upthrust bar

At first the Bulls were strong and they were able to push price up, however, as institutional traders (Smart Money) started to sell, they generated strong Bearish pressure by pushing price strongly down. The Bears had to create strong Supply to overcome the Demand of the Bulls and push the price down. This is a Sign of Weakness, because the Bulls yielded to the strong increase in Bearish pressure.

What we have to see:

• Price should be in an up-trend.
• The Upthrust bar should be a wide range negative bar closing strongly down.
• The last up-trend bar should be on high volume - this tells us that the up-trend was fueled by the strong Bulls and the "Smart Money" had to put a lot of selling pressure to overcome these strong Bulls.
• Ideally, previous bar should be a wide range bar on high volume. The Upthrust bar should have wider range and higher volume. It should engulf the previous bar (have higher High and lower Low). This would point that the distribution started earlier and since more shares are distributed by Smart Money, a reversal down could be deeper.

As was mentioned above this chart pattern is similar to Bearish Engulfing candlestick chart pattern.

What should we expect

After a strong volume surge we should expect a strong reversal. The stronger volume surge was witnessed during the last 2 bars of this pattern - the stronger pressure was applied by the Smart Money against the Bulls. The Smart Money distributed a lot of shares and they are ready to sell more. The close price is also an indication of the Bulls weakness. When an Upthrust bar's close price is close to this bar's Low price it would point to a very weak Bulls. When an Upthrust bar's close price is closer to this bar's middle (candle has lower shadow) it would signal that the Bulls are not very weak and we still may see a continuation of a fight between the Bulls and the Bears.