As of 02/21/2025   Indus: 43,428 -748.63 -1.7%     Trans: 16,034 -430.64 -2.6%     Utils: 1,023 +3.75 +0.4%     Nasdaq: 19,524 -438.35 -2.2%     S&P 500: 6,013 -104.39 -1.7%	YTD  +2.1%    +0.9%    +4.1%    +1.1%    +2.2%	Targets    Overview: 02/13/2025     42,500 or 45,000 by 03/01/2025   16,900 or 15,800 by 03/01/2025   1,050 or 970 by 03/01/2025   19,200 or 20,500 by 03/01/2025   5,875 or 6,200 by 03/01/2025
Chart Pattern Indicator: on 2/19/25

As of 02/21/2025   Indus: 43,428 -748.63 -1.7%     Trans: 16,034 -430.64 -2.6%     Utils: 1,023 +3.75 +0.4%     Nasdaq: 19,524 -438.35 -2.2%     S&P 500: 6,013 -104.39 -1.7%	YTD  +2.1%    +0.9%    +4.1%    +1.1%    +2.2%
Targets    Overview: 02/13/2025     42,500 or 45,000 by 03/01/2025   16,900 or 15,800 by 03/01/2025   1,050 or 970 by 03/01/2025   19,200 or 20,500 by 03/01/2025   5,875 or 6,200 by 03/01/2025
Chart Pattern Indicator: on 2/19/25

Bulkowski on the Bearish Fakey Pattern

Updated with new performance information on 1/22/25.

To determine the configuration of the best performing bearish fakey, I ran tests. This article describes what I found.

I was introduced to a fakey pattern in an email in May 2018, so I did some investigating. The version of the bearish fakey, as I have implemented it, has been tuned for performance. By that, I mean I tested the last two bars of the pattern (leaving the inside day alone) and tried various combinations of high and low to see which variation worked best.

The improved bearish fakey shown in the picture below is the best performing with the lowest failure rate I found.

Background Methodology Important Results Identification Guidelines Trading Tips Example Target Exit, Stock Performance   Target Exit, ETF Performance   Target Exit, Crypto Performance   See Also

Improved Bearish Fakey

Bearish Fakey: Important Bull Market Results

The above numbers are based on 3,977 perfect trades. See the glossary for definitions.

Bearish Fakey: Background

The picture on the right shows a version of the traditional bearish flakey pattern.

I couldn't find any specific configuration for the pattern, just general pictures. I show all candles in shades of gray because of the lack of details. The candles could be white or black.

The size of these candles, their color, their position in relation to each other may have been defined by someone, somewhere, but I couldn't find it. So the figure is a generic representation of the traditional bearish fakey.

Candles 1 and 2 make up the inside day pattern. That is, candle 2 fits inside the high-low range of candle 1. You'll often see candle 1 as black and candle 2 as white, but they can be either color.

Candle 3 shows a strong upward thrust. Often this candle is portrayed as white (bullish, with a close above the day's open) and tall.

Candle 4 is the reversal of the upward thrust. I write "thrust" for both candles 3 and 4 (instead of breakout) because of the lack of configuration details on the pattern. Often this candle is portrayed as black and tall.

Do NOT use this picture to define where the open-high-low-close prices should be in relation to the other candles. Again, I found no rules for that.

Bearish Fakey: Methodology

I used daily price data in 519 stocks from January 1, 2010 to 6/5/2018 in the test. Not all stocks covered the entire period. I set a minimum price of $3 for each trade.

I found 3,977 trades during that bull market run.

I tested the configuration of the last two candles in the pattern and ignored the inside day pattern (the first two candles). As long as price on day 2 was inside the high-low range of day 1, that was fine with me (ties not allowed).

I tested 7 variations of price, moving the last two candles up and down versus the high-low range of candles 1. I did not care about candle color nor the height of any price bar.

Rather, I focused on the high to high and low to low relationship of the candles.

For example, I asked was candle 3's high above candle 1 and it's low below the low of candle 1?

I measured performance from the bottom of the pattern to the ultimate low. The ultimate low is the lowest price the stock reaches before rising either 20% or above the top of the chart pattern, measured low to close.

Thus, the measure is a representation of perfect trades. However, it does allow a trader to compare one chart pattern to another, regardless of stop loss, exit strategies, and so on.

If you wish to review the data, you can download the Excel spreadsheet here (~ 1 mb). The tests assume you've tested for the first two bars, an inside day.

Bearish Fakey: Identification Guidelines

The table refers to the picture on the right. Here is how to identify an improved bearish fakey. In essence, it's a four-day upward price trend that ends with the last candle in the pattern.

If price continues higher, then it's not an improved bearish fakey. Price has to drop below the bottom of the pattern to be valid. I'll explain this in trading tactics.

Bearish Fakey: Trading Tips

Place an order to short the stock a penny below the bottom (low) of candle 1. For example, if candle 1 has a low price of $9.57, then place the order at $9.56.

I show the entry in the figure on the right as a thin green line (the confirmation line, but the actual price should be slightly below candle 1).

If price rises above the high of day 4, cancel the order. You're not looking at a bearish fakey. Chances are, price will continue rising.

In my review of this pattern, too many pattern see price continue higher. That's why price must reverse (move lower) immediately after candle 4.

I show failure of the potential pattern as the thin red line in the figure. If price pierces this line after candle 4 (and before dropping below candle 1), then it invalidates the bearish fakey.

This pattern has a very high failure rate: 56%. That means more than half of all patterns will see price drop less than 5% below the bottom of the bearish fakey before reversing and closing above the top of the pattern.

Also, consider looking for bearish fakey patterns which bump up against a ceiling of resistance, or test the price trend leading to the start of the pattern (that is, a rising or falling inbound trend). I haven't evaluated any of these situations in my analysis of the bearish fakey.

Bearish Fakey: Example

This is a chart showing a bearish fakey pattern. It's highlighted in the inset. The first two bars of the pattern comprise an inside day. Following that, price moves higher, having a high and low above the high and low of Day 1. Day 4 (A) follows day 3 and posts an even higher high-low pair, compared to the prior day.

The pattern becomes valid when price drops below the bottom of the pattern. That signals an entry. I show the entry price as the horizontal red line at B.

In this example, price continues dropping until reaching the ultimate low at C.

Bearish Fakey: Target Exit, Stock Performance

The setup for the following tests is different from the ones previously described. In the next three tables, I'm testing the bearish fakey as if it were bullish, that is, it has an upward breakout. That's not how the pattern was designed or meant to be used, but it's worth checking the performance.

Trading using a target exit is simple to explain. Look at the adjacent chart.

I boxed the fakey pattern in red. Entry happens when the stock climbs above a buy stop placed a penny above the top of the 4-bar pattern. The target would be twice the height of the fakey added to the top of the pattern.

In this case, the stock rises to meet the target. I placed a stop loss order a penny below the bottom of fakey to help limit losses.

For a more detailed explanation of the method I used to test fakey, see the link.

Testing

As explained in the example above, I used a target exit placed twice as high as the height of the fakey pattern (from highest price bar to the lowest one in the fakey) added to the top of fakey. I placed a stop loss order a penny below the bottom of the pattern and waited for one or the other to trigger.

The following table shows results for bull markets with upward breakouts and an inbound price trend either up or down. I used 490 stocks in the test.

In uptrends, where fakey acts as a continuation of the uptrend, results are worse than the benchmark. However, fakey in a downtrend, where the pattern acts as a reversal of the downtrend (because of an upward breakout), performs slightly better than the benchmark. I don't think the results are worth getting excited about.

Bearish Fakey: Target Exit, ETF Performance

The associated chart shows an example of how I tested fakey in exchange traded funds (ETFs).

The red box highlights fakey. The day after the pattern ends, we have an upward breakout and buy the ETF.

A stop loss order placed a penny below the bottom of fakey helps limit the effects of adverse moves.

Computing the height of fakey (times two), added to the top of the pattern, gives a target price at which to exit (not shown).

The ETF was stopped out for a loss just before the ETF climbed.

Testing

This is the same test as the prior one except I used 94 exchange traded funds (ETFs) instead of common stocks.

Fakey in an uptrend flops again when compared to the benchmark. However, performance is better in downtrends.

Bearish Fakey: Target Exit, Crypto Performance

This chart of a cryptocurrency is similar to the other charts for this test. I placed a buy stop a penny above the top of the fakey and a stop loss order a penny below the bottom of the pattern.

In this example, the crypto broke out upward and continued higher, quickly reaching the sell target (twice the height of fakey).

Testing

This is the same test as the prior one except I used 29 cryptocurrencies.

Fakey beats the benchmark in both up and down trends, but not by a lot. I'd be cautious of the results because of the low sample counts.

-- Thomas Bulkowski

See Also

• How did I test small patterns in stocks, ETFs, and crypto currency?
• Small pattern performance.
• Updated daily list of short patterns.

Other 4-bar patterns

• 4-bar candlesticks
• Bullish fakey
• 3L-R
• Inverted 3L-R
• Narrow range 4
• Turn-key, bearish
• Turn-key, bullish

Antonym: Opposite of the word you're trying to think of.