Counterattack Candlestick Pattern: Bullish and Bearish Rules, Trading and Tested Results

The counterattack candlestick pattern is a two-candle reversal pattern in which the second candle opens far beyond the first one, then fights all the way back to close at the same price. The bullish counterattack forms after a downtrend: a long bearish candle, then a long bullish candle that opens much lower and closes equal to the first close. The bearish counterattack is its mirror image after an uptrend.

This guide covers both versions: how to identify them, the psychology behind them, how traders use them, and the question the candles alone cannot answer: what happened next. Our test bench detected 206 bullish and 262 bearish counterattack patterns on daily charts since 1984 and compared each one with random days on the same assets.

What is the counterattack candlestick pattern?

A counterattack pattern, also called counterattack lines or meeting lines, is made of two long candles of opposite colors that close at the same level. The first candle extends the trend. The second opens with a gap in the same direction, so the trend looks even stronger, then the other side counterattacks and pushes price all the way back to the prior close. That is the whole signal: the gap was erased in one session.

Steve Nison, who introduced Japanese candlestick charting to Western traders in Japanese Candlestick Charting Techniques (1991), describes counterattack lines as a reversal signal, less forceful than the piercing line or the dark cloud cover, since the second candle only gets back to the prior close instead of closing deep inside the first body.

Our bench applies the rule without judgment, as in the open-source TA-Lib library (function CDLCOUNTERATTACK; on geometry alone, with TA-Lib's own threshold, our rule finds every case it flags): two candles with long real bodies (more than 1.3 times the average of the 10 previous candles, 1.6 times on a textbook pattern, both stricter than TA-Lib's threshold), of opposite colors, whose closes are equal within a small tolerance (5% of the recent average range). The bullish version must follow a downtrend (the close before the pattern at least one average true range below the close 10 bars earlier, and in the lower half of the range of the 40 previous closes), the bearish version an uptrend.

Key characteristics of counterattack lines

The bullish counterattack pattern

• The market is in a downtrend.
• The first candle is a long bearish (black or red) candle that closes near its low.
• The second candle opens with a gap down, well below the first close.
• It rallies all session and closes at, or very near, the first candle's close, with a long bullish (white or green) body.

The chart above is not drawn by hand. It is the median shape of the bullish counterattack patterns our bench found on daily charts across all markets (the count is in the caption), with the faded candles showing the decline before the pattern, and the lines of the position we test: entry above the pattern high, stop-loss below its low, target at twice the risk.

The bearish counterattack pattern

• The market is in an uptrend.
• The first candle is a long bullish candle that closes near its high.
• The second candle opens with a gap up, well above the first close.
• Sellers push price down all session, and it closes at, or very near, the first close, with a long bearish body.

This chart is measured too: the median shape of the bearish counterattack patterns our bench found on daily charts, with the faded candles showing the rally before the pattern, and the position we test: entry below the pattern low, stop above its high, target at twice the risk.

How to identify a counterattack pattern on a chart

Step-by-step identification process

1. Check the trend. A reversal pattern needs a trend to reverse: a decline for the bullish counterattack, a rally for the bearish one.
2. Find a long candle in the trend's direction. Its body should be clearly larger than the bodies of recent candles.
3. Look for the gap. The second candle opens beyond the first close, in the direction of the trend.
4. Compare the closes. The second candle, of the opposite color and also long, closes at the same price as the first. If it closes deeper inside the first body, you are looking at a piercing line or a dark cloud cover; if it closes beyond the first open, an engulfing pattern.

Where it appears

The counterattack is rare, and our data shows why. It needs an opening gap, and gaps are common at the stock market open, but not on markets that trade around the clock. On daily US stocks it appears once every 39,996 bars in its bullish form and once every 31,823 in its bearish form. On hourly crypto charts, where each candle opens almost exactly at the previous close, it shows up once every 543,754 bars (bullish) and 815,631 (bearish). On daily crypto and forex charts, we found too few occurrences for any statistic.

Psychology behind the counterattack signal

Take the bullish version. The first session is a clear win for sellers: a long bearish candle, a close near the low. The next morning opens with a gap down, and holders who feared more losses sell at the open. Then buying pressure appears and lifts price all day, until it closes exactly where the previous session ended. The sellers' gain of the morning was fully taken back. Classical candlestick analysis (Nison) reads it as a sign that selling pressure is fading and that buyers are ready to defend that price level.

The bearish counterattack tells the opposite story: a strong bullish session, an opening gap up that looks like more of the same, then a selloff that erases the whole gap. Buyers who chased the open are trapped, and control may be shifting to sellers.

The story is plausible, but it describes two candles. Whether the counterattack changes the trend is a question for data. We come back to it in the reliability section.

How to trade the counterattack pattern

Unless stated otherwise, the figures in this section are for daily charts, all markets combined.

Entry and stop-loss placement

The entry we test for the bullish counterattack is a buy stop just above the high of the two candles, which waits for price to confirm the reversal before buying. In our tests, that entry was triggered in 52.9% of cases; in 45.1%, price fell below the pattern low first and the setup was canceled before any trade. For the bearish counterattack, the entry is a sell stop below the pattern low: it was triggered in 50.0% of cases and canceled in 48.9%. The few remaining setups touched neither level within the 20 bars our test allows. About half of the signals never become a trade. Results are counted in R, the initial risk of the trade.

The natural stop-loss goes on the other side of the pattern: below the low of the two candles for a long position, above their high for a short one. The pattern is large (7.1% of price on the median bullish occurrence, 2.13 times the average true range), so the stop is wide.

Profit targets and risk management

The target we test is twice the risk (a 2:1 reward-to-risk ratio); another choice is the next resistance level (bullish) or support level (bearish). Bullish trades that reached the 2:1 target took a median of 22 days; stopped trades took a median of 11 days. Of the bullish trades that hit their stop, 25.0% had first been up 1 R: a partial exit or a trailing stop changes the outcome of those trades. Size every position on the distance from entry to stop, and keep the risk per trade a small, fixed share of the account.

Confirmation

Counterattack pattern vs other reversal signals

The cards below show the 10-bar verdict of each pattern; the 2:1 figures in the text use the same position on daily charts, compared with the same trade on random dates.

Counterattack lines vs engulfing patterns

In an engulfing pattern, the second body covers the whole first body: the counterattack candle stops at the prior close, the engulfing one goes past the prior open. The bullish engulfing reached its target in 36.9% of cases against 35.7% on random dates; the bullish counterattack in 34.3% against 33.9%. The engulfing's average result per trade (+0.12 R against +0.08 R), on 48,554 trades, is rated "No clear edge"; so is the counterattack's (+0.12 R against +0.18 R), on 108 trades: neither gap passed our statistical test.

Counterattack lines vs piercing and dark cloud cover

The piercing line also opens with a gap down after a long black candle, but closes above the middle of the black body: further than the counterattack. Its position hit the target in 36.6% of cases against 35.6% on random dates. On the bearish side, the dark cloud cover reached its target in 26.4% of cases against 27.7%, and the bearish counterattack in 27.7% against 24.4%. A deeper close did not make a measurable difference.

Counterattack vs in-neck

The in-neck pattern looks similar: a long black candle, then a white candle that opens lower and closes at or just above the first close. The difference is the white candle: small in the in-neck, as Nison defines it, which is read as a pause before the decline continues; long in the counterattack, which is read as a reversal. The matching low is another cousin, with two black candles closing at the same price.

Best practices for using technical indicators with the pattern

Moving averages

We split daily occurrences by the 200-day moving average. Bullish counterattacks above it (a pullback inside a long-term uptrend) reached the 2:1 target in 46.9% of cases, for an expectancy of +0.43 R; below it, 28.4% and −0.06 R. Bearish counterattacks above the average reached the target in 27.6% of cases (−0.10 R); the 40 bearish occurrences below it gave only 23 closed trades, too few to read. These splits are descriptive and not corrected for multiple testing: the bullish version did better with the long-term trend.

Volume

A classic filter is high volume on the second candle. Bullish counterattacks on volume above 1.5 times the 20-day average reached the target in 39.6% of cases, against 30.0% on normal volume. Bearish ones: 25.5% against 28.9%. High volume did better for the bullish version and slightly worse for the bearish one, on only 48 bullish and 47 bearish high-volume trades; these splits are descriptive and not corrected for multiple testing.

RSI and support levels

Two other filters can be added: an oversold RSI, or a known support level for a bullish counterattack and a resistance level for a bearish one. We have not tested these filters: if you use them, test them on your own market first.

How reliable is the counterattack pattern?

The counterattack candlestick pattern is not reliable on its own: on every market and timeframe with enough data, the excess return of both versions over the rest of the market did not pass our correction. Here are the numbers from our test bench, which applies the same rule to full price history and compares each occurrence with random bars on the same assets and with the rest of the market.

Read the table in pairs of columns. "Moved as expected" means higher 10 bars later for the bullish version, lower for the bearish one. In the first row, 55.3% of bullish counterattacks were followed by a higher price 10 days later, against 54.6% of random days on the same assets: random days on these assets were more often higher than lower, so a bullish signal starts with an advantage that has nothing to do with the pattern. The excess return over the rest of the market is +0.50%, with a 95% confidence interval from −0.49% to +1.43%: zero is inside, so the verdict on direction is no clear edge. The bearish daily row shows a wider gap: 54.6% of bearish counterattacks were lower 10 days later, against 45.2% of random days. Its excess return of +0.92% has an interval from +0.05% to +1.73%, which excludes zero: the gap passes a simple test (p = 0.04) but does not survive our correction for multiple tests, so that verdict is promising, not a proven edge.

The 2:1 position shows no edge in either version. The bullish trade reached its target in 34.3% of cases, for +0.12 R per trade before costs, but the same entry, stop and target on random dates averaged +0.18 R. The bearish trade averaged −0.09 R per trade, against −0.26 R on random dates. Neither of these daily differences is statistically significant.

Can this pattern be used for intraday trading?

Our data cannot tell yet. On hourly crypto charts, the bullish position reached its target in 25.0% of cases against 40.2% on random dates (−0.25 R per trade against +0.22 R), and the bearish one in 11.1% against 45.8% (−0.67 R against +0.47 R). These figures rest on only 12 bullish and 9 bearish trades, so the 2:1 trade verdict is Not enough data for both versions: below 30 trades, we show the numbers but do not draw conclusions from them. On the move after 10 bars, measured on all 27 bullish and 18 bearish occurrences, the verdict is not enough data for both. On hourly and 4-hour forex charts the pattern forms almost only at the weekly open, across the weekend gap, so we do not publish those rows.

Does it work better on weekly charts?

We cannot say. On weekly charts, the bullish position hit its target in 45.5% of 11 trades, against 48.3% on random dates, but so few trades are rated Not enough data and cannot be interpreted; the move after 10 weekly bars is rated not enough data. The method is published in our methodology.

Real examples of the counterattack pattern

The gallery shows real counterattack patterns from our bench, bullish and bearish, with their actual outcome. Three more cases are described in full after it, under A bullish reversal that worked and Setups canceled before entry.

A bullish reversal that worked

On July 28, 2000, USB fell from 8.48 to 8.17 (prices adjusted for splits and dividends). On July 31 it opened at 7.97, with a gap down, and closed at 8.17, back at the prior close. The buy stop at 8.48 was triggered the next day, with a stop-loss at 7.97 and a 2:1 target at 9.52, reached on August 4, 2000 for a gain of 2 R. The stock was 26.6% higher 10 days after the pattern.

Setups canceled before entry

On March 6, 2020, during the pandemic selloff, Westamerica Bancorporation (WABC) opened at 44.37, under the prior close of 46.14, and closed at 46.18. Price never traded above the 47.72 high; on March 9 it fell through the 44.37 low and the setup was canceled, with the stock 8.8% lower 10 days after the pattern. On January 24, 2022, Terreno Realty (TRNO) closed at 63.68, a few cents from the prior close of 63.62, after a lower open; four sessions later the low broke first, and the stock was 2.1% lower after 10 days.

Limitations and risks of the counterattack pattern

• No edge over random dates that survives our statistical correction, on any market and timeframe with enough data to test, in either direction.
• Rare: once every 39,996 daily bars on stocks for the bullish version, and almost absent from crypto and forex daily charts.
• About half of the setups are canceled before entry.
• Wide stop, because the pattern is made of two long candles.
• On hourly crypto charts, too few trades to judge the setup in either direction.

The strengths are real but limited: precise rules, a clear place for the stop, and a story that is easy to read on a chart.

Frequently asked questions

Summary and final trading tips

• A counterattack is two long candles of opposite colors closing at the same price, the second opening with a gap in the direction of the trend.
• On 206 daily occurrences, 55.3% of bullish counterattacks were higher 10 days later, against 54.6% for random days.
• The bullish 2:1 position reached its target 34.3% of the time, against 33.9% on random dates; the bearish one 27.7% against 24.4%. Neither difference is significant.
• On hourly crypto charts, the 2:1 position gave too few trades to compare with random entries.

If you trade it, treat it as a location for a trade, not as a reason for one: define the stop beyond the pattern before entry, size the position on that distance and keep the risk per trade small.

About the author and the data. Written by Amaury, founder of PatternsWizard, who is passionate about finance, quantitative trading and data analysis. He built the PatternsWizard test bench, which detects each setup with published rules on full market history: crypto, forex, US stocks, ETFs, indices and commodities. Trades and win rates are compared with random bars on the same assets, excess returns with the rest of the market, with error margins and a correction for multiple testing, and the whole pipeline is checked on random-walk prices, where nothing can be predicted. Statistics on this page were generated on November 5, 2026. The full methodology explains every step. This page is educational and is not financial advice: every position carries a risk of loss, and past results on our bench do not guarantee future ones.