[Summary]
A cut line is a pattern in which a large positive line appears after a fall and cuts deeply into the substance of the previous negative line.
This can be seen as an early sign of a rebound as buying moves into a market that was dominated by selling.
What is a score line?
The cut line is a reversal candidate pattern seen with two candlesticks.
The first line is the Yin line and the second line is the Yang line.
The second positive line moves deeper into the substance of the first negative line, indicating that the selling momentum may have weakened.
Difference with wrapped legs
The wrapping leg is shaped so that the second leg wraps around the first leg.
The cut line is not so deep that it wraps around it, but it cuts deep into the previous hidden line.
| pattern | How to see strength |
|---|---|
| score line | Early signs of a backlash |
| The wrapped legs of the sun | stronger reversal sign |
Points to note
The score line is more meaningful as it appears in the lowest price range.
Since it may end with a temporary rebound during a decline, we will look at the trading volume and movements from the next day onwards. Even if you make a deep cut, if it doesn't continue the next day, you'll be forced to sell back.
Summary
The cut line is a pattern that indicates the possibility that selling has weakened and buying has begun.
To confirm that the price has bottomed out, we will see if the price continues to rise on the next bar.