As of 04/17/2024   Indus: 37,753 -45.66 -0.1%     Trans: 14,987 -259.68 -1.7%     Utils: 853 +17.82 +2.1%     Nasdaq: 15,683 -181.88 -1.1%     S&P 500: 5,022 -29.20 -0.6%	YTD  +0.2%   -5.7%   -3.2%    +4.5%    +5.3%	Targets    Overview: 04/12/2024     39,800 or 37,150 by 05/01/2024   16,200 or 15,000 by 05/01/2024   885 or 850 by 05/01/2024   16,700 or 15,800 by 05/01/2024   5,250 or 5,025 by 05/01/2024
Chart Pattern Indicator: on 4/1/24

As of 04/17/2024   Indus: 37,753 -45.66 -0.1%     Trans: 14,987 -259.68 -1.7%     Utils: 853 +17.82 +2.1%     Nasdaq: 15,683 -181.88 -1.1%     S&P 500: 5,022 -29.20 -0.6%	YTD  +0.2%   -5.7%   -3.2%    +4.5%    +5.3%
Targets    Overview: 04/12/2024     39,800 or 37,150 by 05/01/2024   16,200 or 15,000 by 05/01/2024   885 or 850 by 05/01/2024   16,700 or 15,800 by 05/01/2024   5,250 or 5,025 by 05/01/2024
Chart Pattern Indicator: on 4/1/24

Bulkowski on the On Neck Candle Pattern

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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.

On Neck Candlestick: 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.

On Neck

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On Neck Candlestick: 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 Candlestick: Identification Guidelines

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On Neck Candlestick: 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.

On Neck Candlestick: 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

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See Also

• Perhaps this is an in neck candlestick.
• Bullish meeting lines might be what you are looking at.
• A morning star is similar to an on neck, but it has a confirming candle. Find out more.
• Tall candles show support and resistance.
• Two candlestick tips could improve profitability.
• Candles near the yearly low perform best.
• Chart pattern breakouts: Which candlesticks appear most often the day before breakouts?
• Shadows. Do tall candle shadows predict price turns? Yes and no.
• Tall candles at peaks and valleys. Tall candles appear at turning points.

 

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Written by and copyright © 2005-2024 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.