Advance Block | RizeTrade

What is the Advance Block Candlestick Pattern?

The Advance Block candlestick pattern is a bearish reversal pattern that forms during an uptrend, signaling that the bullish momentum is weakening and a potential trend reversal may be imminent.

It consists of three consecutive bullish (green) candles, each making a new high — but with progressively smaller real bodies and increasing upper wicks (shadows). This visual structure reflects buyer exhaustion and the growing presence of sellers as the price rises.

🔑 Key Takeaways

 📉 The Advance Block is a three-candle bearish reversal pattern that forms at the top of an uptrend.
 🕯️ Each candle closes higher but shows smaller bodies and longer upper wicks, signaling buyer weakness.
 ✅ It reflects waning bullish momentum and hints at a possible reversal.
 🎯 A bearish confirmation candle strengthens the reversal indication.
 💪 The pattern is most reliable near resistance, Fibonacci extensions, or overbought RSI levels.

🔍 How Reliable Is the Advance Block Candlestick Pattern?

The Advance Block pattern often signals a slowdown in bullish momentum — but how well does it hold up when tested across real market data?

🧪 Our Backtest Setup

Statement:
We used our Candlestick Pattern Performance Matrix to evaluate the Advance Block’s performance across multiple asset classes and market conditions.

Evidence:

• 1,108 total instances of the Advance Block pattern

• Tested across forex, equities, and crypto markets

• Timeframes: 4H and Daily

• Environments: both trending and ranging markets

• Focus: measured post-pattern price behavior to assess true follow-through reliability

Insight:
This comprehensive setup helped isolate how well the Advance Block predicts a genuine shift in momentum, not just a short-term pause.

📈 Backtest Results

Statement:
We measured accuracy both in isolation and when combined with simple confirmation tools.

Evidence:

Insight:
Pairing the Advance Block with a momentum-based confirmation — like RSI or MACD divergence — boosted success by 7 percentage points, indicating stronger reliability when fading bullish momentum is confirmed by indicator weakness.

Traders can improve their consistency by reviewing their trade outcomes over time to see how the Advance Block setup aligns with broader market sentiment and momentum conditions.

📉 How to Trade the Bearish Advance Block Pattern?

This three-candle formation reveals waning bullish strength — each candle rising with less conviction, signaling a likely reversal after an extended uptrend.

🔍 Entry

Identify a clear uptrend followed by three bullish candles that weaken progressively:
1️⃣ A strong bullish candle,
2️⃣ A smaller candle with a longer upper wick, and
3️⃣ A small-bodied candle with a pronounced upper wick showing selling pressure.
Enter short once a bearish candle closes below the third candle’s low, confirming that buyers are losing control.

🛡️ Stop-Loss

Place your stop just above the high of the third candle — this level invalidates the reversal if price breaks higher.
If the next candle closes above that point, exit early to avoid continuation risk.

🎯 Target

Set the initial target at the nearest support or recent swing low for conservative exits.
Aggressive traders can use Fibonacci retracements (38.2%–61.8%) or maintain a 2:1 reward-to-risk ratio to capture deeper pullbacks.

Trading Strategies that Use the Advance Block Pattern

Advance Block + RSI Overbought Divergence

Concept
This setup combines the Advance Block pattern with RSI divergence to catch exhaustion in overextended uptrends. Divergence confirms that bullish momentum is fading even as price continues higher.

Setup
Apply RSI (14) and confirm readings above 70 or spot bearish divergence where price makes higher highs while RSI forms lower highs. Identify the Advance Block pattern near resistance.

Short Setup
Enter short once a bearish confirmation candle closes below the third candle’s low.
Stop Loss: Above the nearby resistance zone.
Take Profit: At the previous support or next key demand area.

What Gives It an Edge
By combining overbought momentum with pattern confirmation, this approach filters out false signals and times reversals as momentum weakens.

Advance Block + Volume Divergence Strategy

Concept
Declining volume often signals fading buying interest. When paired with the Advance Block, it highlights potential exhaustion at the top of a rally.

Setup
Observe volume behavior across the three candles. Decreasing volume confirms weakening participation despite rising prices.

Short Setup
After a bearish confirmation candle, enter short with position size adjusted for volatility.
Stop Loss: Above the pattern’s high.
Take Profit: At the nearest support or previous swing low.

What Gives It an Edge
Combining price action with volume divergence enhances reliability, showing not just price hesitation but a genuine loss of buyer conviction.

Advance Block + Moving Average Confluence

Concept
Integrating a moving average filter confirms when short-term momentum aligns with a reversal. The Advance Block identifies the potential top, and the MA confirms the turn.

Setup
Plot a 50-period moving average. Look for the pattern forming near or above this level. Wait for a close below the MA following the pattern to confirm the shift.

Short Setup
Enter short after the bearish close below the MA.
Stop Loss: Above the pattern’s high.
Take Profit: At the next support zone.

What Gives It an Edge
Using the moving average as dynamic resistance provides extra confirmation, helping avoid premature entries during temporary pullbacks.

Real Trading Example: Tesla (TSLA)

Context
After a strong rally from $210 to $238, TSLA displayed three consecutive bullish candles showing signs of exhaustion.

Price Behavior

• Candle 1: Closes at $230 with a strong bullish body.

• Candle 2: Closes at $235 with a smaller body and a longer upper shadow.

• Candle 3: Closes at $238 with a small body and a pronounced upper wick.
  Volume declined across all three sessions, signaling reduced buying strength.

The next day, TSLA formed a large bearish candle closing below $230, confirming the reversal.

Trade Setup

• Entry: At $229 (below confirmation candle)

• Stop Loss: At $240 (above the third candle’s high)

• Take Profit: Around $215 (previous support)

This trade achieved a 2:1 reward-to-risk ratio, validating the Advance Block’s bearish reversal signal.

Best Indicators to Combine with the Advance Block Pattern

Common Mistakes and How to Avoid Them

Skipping Confirmation
Entering without a bearish confirmation candle often results in premature shorts during ongoing uptrends.

Ignoring Bullish Breakouts
A close above the third candle’s high invalidates the setup and signals continuation.

Neglecting Volume Clues
Low-volume patterns indicate weak conviction and unreliable reversals.

Tips for Trading the Advance Block Pattern

• Always confirm with momentum or volume divergence before entering.

• Avoid setups in sideways or low-volatility markets.

• Use multi-timeframe analysis to confirm broader exhaustion.

• Manage exposure — risk only 1–2% of account equity per trade.

⚠️ Advance Block vs. Three Black Crows: Early Warning or Full Reversal?

Both the Advance Block and Three Black Crows patterns highlight bearish sentiment — but the pace and conviction behind each tell different stories about market momentum.

🧩 Pattern Structure

Advance Block

• Forms during an uptrend with three consecutive bullish candles, each showing progressively smaller bodies or longer upper wicks.

• Reveals buyer fatigue as upward momentum slows.

• Acts as an early warning that bullish strength may be fading and a reversal could soon follow.

Three Black Crows

• Consists of three large bearish candles, each opening within the previous body and closing near their lows.

• Demonstrates decisive seller dominance and a clear shift in control.

• Typically confirms the start of a strong downtrend.

💡 Key Insight

The Advance Block pattern signals gradual weakness — it’s a caution flag for traders to tighten stops or watch for confirmation.
Meanwhile, the Three Black Crows represents outright reversal strength, confirming that sellers have taken full control of price action.

Traders can strengthen their analysis by tracking trade outcomes to see how early warnings like the Advance Block compare to confirmed reversals in their trading performance.