On Neck Line |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bearish
Prior Trend of Candlesticks: Bearish
Reliability of Candlesticks : Recommended
Confirmation of Candlesticks: Reliable
Candlestick Patterns Key Reference |
DESCRIPTION
On Neck Line pattern is a two candlestick formation.
On Neck Line pattern is recognized by a bearish candlestick followed by a smaller bullish candlestick, which its closing price is near to the low of the first bearish candlestick during a downtrend.
If the low of the white candlestick break new low, the market will go further down.
PATTERN RECOGNITION
1. On Neck Line pattern can be identified by downtrend.
2. Refering to above diagram, we will firstly see a long bearish candlestick.
3. Then we will see a following bullish candlestick (Bullish Marubozu) which open below the low of the previous candlestick. This bullish candlestick might not need to be long in length or it might form as Bullish Meeting
Line pattern.
4. The closing price of the second bullish candlestick should be at the first bearish candlestick low.
EXPLAINATION
The On Neck Line pattern look very similar to Deaisen Meeting Lines pattern but the Bullish Marubozu fails to meet fail to come to the closing price of the previous bearish candlestick.
It also look like an an undeveloped version of the Bullish Piercing Line pattern. It is similar except the second bullish candlestick body only come to meet the previous bearish candlestick's low.
The first bearish candlestick indicate that the bearish momentum increases. Then we can see the second candlestick showing a gap down which could not continue the downtrend and prices start to go up and stop at the previous candlestick's low.
Having said that, buyers might not feel comfortable to enter long at this moment hence the downtrend may continue in short-term trend.
The Continuation Patterns imply that a trend has temporary paused and will continue its original trend rather than reversal.
POINT TO NOTE
The On Neck Line pattern is different from Deaisen Meeting Lines pattern.
There will be a strong downtrend if the trading volume increases on the second candlestick.
A confirmation is required by the third bearish candlestick with a gap down or lower close.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
