Community Forex Questions
What is an on-neck pattern?
An on-neck pattern is a bearish continuation candlestick formation that appears in technical analysis of financial markets, particularly in stocks and forex. It typically occurs during a downtrend and suggests that sellers remain in control, potentially leading to further price declines.
This pattern consists of two candlesticks:
1. A long bearish candle that signifies strong selling pressure.
2. A small bullish candle that opens below the previous close and closes near, but not above, the prior candle’s low.
The key characteristic of the on-neck pattern is that the second candle’s closing price is very close to or at the low of the first candle, forming a horizontal neckline. Unlike reversal patterns, the On-Neck Pattern does not indicate a trend change but rather a brief pause before the downtrend resumes.
Traders interpret this pattern as a weak buying attempt that fails to overcome selling pressure. If the next candle breaks below the pattern’s low, it confirms the continuation of the bearish trend.
While useful, the on-neck pattern should not be used in isolation. Traders often combine it with volume analysis, support/resistance levels, and other technical indicators to improve accuracy in predicting price movements.
This pattern consists of two candlesticks:
1. A long bearish candle that signifies strong selling pressure.
2. A small bullish candle that opens below the previous close and closes near, but not above, the prior candle’s low.
The key characteristic of the on-neck pattern is that the second candle’s closing price is very close to or at the low of the first candle, forming a horizontal neckline. Unlike reversal patterns, the On-Neck Pattern does not indicate a trend change but rather a brief pause before the downtrend resumes.
Traders interpret this pattern as a weak buying attempt that fails to overcome selling pressure. If the next candle breaks below the pattern’s low, it confirms the continuation of the bearish trend.
While useful, the on-neck pattern should not be used in isolation. Traders often combine it with volume analysis, support/resistance levels, and other technical indicators to improve accuracy in predicting price movements.
An on-neck pattern is a two-candlestick chart pattern used in technical analysis, typically indicating bearish continuation. It forms during a downtrend and consists of a long bearish candle followed by a smaller bullish candle. The bullish candle opens below the previous candle’s close and closes near or slightly above the low of the bearish candle, resembling a neckline.
This pattern suggests that buying pressure is weak, as the bullish candle fails to recover significantly. Traders interpret it as a sign that sellers remain in control, and the downtrend is likely to continue. Confirmation is often sought through additional bearish signals or volume analysis. While the on-neck pattern can be a useful tool for identifying potential selling opportunities, it should be used in conjunction with other indicators to improve accuracy and reduce false signals.
This pattern suggests that buying pressure is weak, as the bullish candle fails to recover significantly. Traders interpret it as a sign that sellers remain in control, and the downtrend is likely to continue. Confirmation is often sought through additional bearish signals or volume analysis. While the on-neck pattern can be a useful tool for identifying potential selling opportunities, it should be used in conjunction with other indicators to improve accuracy and reduce false signals.
Feb 14, 2025 03:13