As of 07/14/2020
  Indus: 26,643 +556.79 +2.1%  
  Trans: 9,465 +159.29 +1.7%  
  Utils: 800 +8.67 +1.1%  
  Nasdaq: 10,489 +97.74 +0.9%  
  S&P 500: 3,198 +42.30 +1.3%  
YTD
-6.6%  
-13.2%  
-9.0%  
 +16.9%  
-1.0%  
  Targets    Overview: 07/14/2020  
  Up arrow27,800 or 24,500 by 08/01/2020
  Up arrow10,050 or 8,600 by 08/01/2020
  Up arrow840 or 740 by 08/01/2020
  Up arrow10,800 or 10,000 by 08/01/2020
  Up arrow3,325 or 3,000 by 08/01/2020
CPI (updated daily): Arrows on 6/29/20
As of 07/14/2020
  Indus: 26,643 +556.79 +2.1%  
  Trans: 9,465 +159.29 +1.7%  
  Utils: 800 +8.67 +1.1%  
  Nasdaq: 10,489 +97.74 +0.9%  
  S&P 500: 3,198 +42.30 +1.3%  
YTD
-6.6%  
-13.2%  
-9.0%  
 +16.9%  
-1.0%  
  Targets    Overview: 07/14/2020  
  Up arrow27,800 or 24,500 by 08/01/2020
  Up arrow10,050 or 8,600 by 08/01/2020
  Up arrow840 or 740 by 08/01/2020
  Up arrow10,800 or 10,000 by 08/01/2020
  Up arrow3,325 or 3,000 by 08/01/2020
CPI (updated daily): Arrows on 6/29/20

Bulkowski on the On Neck Candle Pattern

 

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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-- Tom Bulkowski

$ $ $

The on neck candlestick pattern is a peculiar name for a candle that does not work well as a continuation. Yes, it functions in theory as it does in reality, but the continuation rate is what I consider "near random." Once price breaks out, the trend is decent for upward breakouts, but not so good for downward ones.

Important Results
Discussion
Identification Guidelines
Three Trading Tidbits
Example
See Also

On Neck: Important Results

Theoretical performance: Bearish continuation
Tested performance: Bearish continuation 56% of the time
Frequency rank: 70
Overall performance rank: 33
Best percentage meeting price target: 64% (bear market, up breakout)
Best average move in 10 days: 8.32% (bear market, up breakout)
Best 10-day performance rank: 6 (bear market, up breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal on neck candlestick
On Neck

Top of page More

On Neck: Discussion

The on neck candlestick pattern is a two line candle with a downward price trend leading to it. A tall black candle is the first to appear followed by a white candle with a close that matches the prior low.

The pattern works in theory as it does in reality, that is, as a bearish continuation 56% of the time. I consider that "near random." The best average move 10 days after the breakout occurs in a bear market after an upward breakout. Price climbs 8.32% when a move of 6% is considered good. That gives it a very high 10-day performance rank of 6 (out of 103 candle types, where 1 is best).

On Neck: Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternDownward.
ConfigurationLook for a tall black candle in a downward price trend. Following that, a white candle has a close that matches (or nearly matches) the prior low.

Top of page More

On Neck: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. On neck candles that appear within a third of the yearly low perform best -- page 610.
  2. Select tall candles for the best performance -- page 610.
  3. On neck continuation candles occur most often within a third of the yearly low -- page 611-612.

The on neck candlestick on the daily scale

On Neck: Example

The on neck candlestick pattern shown on the daily chart is circled in red. Price forms a tall black candle followed by a white candle. The closing price of the white candle is at or near the low of the black candle. Both appear in a downward price trend, as required.

In this example, the on neck breaks out downward two days after it completes in what looks to be a high wave candle (it would be a long legged doji or even a Rickshaw man but the body has a height and the shadows should be longer for a rickshaw man). The downtrend reverses there and moves up only to reverse and eventually continue moving lower, joining the primary down trend already in existence.

-- Thomas Bulkowski

 

Top of page More

See Also

Written by and copyright © 2005-2020 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. I reached enlightenment, and all I got was this STUPID AURA.

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

Copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved.
Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.
Some pattern names are registered trademarks of their respective owners.

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