What is a Hook Reversal?

Hi Sam, and thanks for asking.

A hook reversal is a candlestick pattern that demonstrates a trend swing and may serve as a prompt to join or leave a position if combined with other technical signals.

Bullish Hook Reversal

Occurring in a downtrend, it features two candlesticks with the second one being within the first’s trading range. The second candle should include a lower peak and higher base than the first.

The fact that it starts with a descent proves bears are in control until a reversal occurs. The bullish takeover is shown by the second candle’s low being higher and its high being lower than the preceding one. An uptrend follows the bulls’ dominance.

Bearish Hook Reversal

This short-to-medium illustration forms during an uptrend. It’s characterized by two candlesticks with the second candle being in the first one’s range. The second candle should display a lower peak and a higher bottom than the first.

The opening ascent indicates bullish dominance. However, a reversal is initiated at the trend’s brief peak. The arrangement of the second candle’s highs and lows relative to the first’s tells you bears are in charge, hence, the downtrend.