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What is an On Neck Pattern?


Brian Hayslip

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The "On Neck Pattern" is a technical term used in financial analysis and charting, specifically in candlestick chart analysis. This pattern emerges during a downtrend and is recognized as a bearish reversal formation. The pattern involves two candlesticks and occurs after a prolonged decline in the price of an asset.

To identify the On Neck Pattern:

The first candlestick is bearish, which means it closes lower than its opening price, and its closing price is near the lowest point of the day's trading range.

The second candlestick is smaller and bullish, indicating that it closes higher than its opening price. However, it opens below the closing price of the first candlestick and its closing price is almost equal to the lowest point of the first candlestick.

The On Neck Pattern implies that the bearish sentiment from the first day persists into the second day, and the bullish attempt to reverse the trend fails as the price remains close to the previous day's low.

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