What candle formation signals a potential reversal after a downtrend?

The Bullish Counterattack Line is a candle formation that indicates a potential reversal after a downtrend. This formation typically consists of two candles: the first is a bearish candle that sets a new low, while the second is a bullish candle that opens at or near the previous candle's close and closes above its midpoint. The presence of the bullish candle following a bearish one suggests a rejection of lower prices by buyers, indicating a shift in sentiment from bearish to bullish, which can signal a reversal in the prevailing downtrend.

The rationale behind this pattern lies in the pressing upward movement represented by the second candle, which reflects increased buying interest and could indicate the potential beginning of a new upward trend. This formation is particularly significant because it highlights the battle between buyers and sellers, ultimately favoring buyers, creating optimism in the market.

Other formations listed, such as the Shaven Head, Bearish Belt Hold, and Shaven Bottom, do not convey the same implication of a bullish reversal after a downtrend. Each serves different purposes within market analysis but lacks the clear upward momentum indicated by the Bullish Counterattack Line.