Raindrop is a two-candle bullish trend reversal pattern.

It opens below the previous closing price and closes almost near where it opened. So, it is like a Doji pattern. This formation is known as a Raindrop pattern.

This pattern is a hope pattern hence the name. Hope that the downtrend is over.

The gapped down bearish candle in the downtrend was expected to take the price lower but the bears could not carry the momentum. There is a possibility of exhaustion of downtrend. This pattern indicates possibility of the trend reversal but it needs more confirmation.

Higher the lower shadow in the second pattern, strong the Raindrop pattern.

The Rain drop bullish pattern is valid as long as price stays above the bottom of the second candle which is a doji pattern.

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This pattern can be plotted on the chart by adding it from the study menu in TradePoint & RZone. The pattern is also available in the system builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.


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