On Neck Pattern

Categories: Charts

When the bears are pulling a stock downhill, you’ll see long, black candlesticks going down, down, down. Traders with skin in the game rally together, trying to turn those downward bears into upward bulls, keeping that stock value up. You can see the attempt, which falls flat, with a very short, bullish candlestick that closes below the previous bearish candle’s closing price. This is an on neck pattern...kind of a "wah wah wahhh" moment for bullish-hoping traders.

While the on neck pattern is used by traders as one tiny piece in a much larger picture, there’s debate on the predictive value of it.

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