|By Nathan Young|
July 11, 2017
As technical traders search for the next profitable opportunity, they also need to find patterns that can lead to a continuation of the current situation. The on-neck pattern is a continuation pattern that tells the trader the trend has the potential to continue in the current bearish pattern.
When searching for the candlestick pattern, you must look for a market bearish trend first. Once you find the trend, you then must look for a bearish candlestick that has a long body, indicating there was movement to the downside in the previous period. The candle after this must first open below the close of the last candle, and close below the closing period of the previous candle as well.
What this indicates is that the market was unable to push price higher than the previous day, leading to believe the trend is going to continue in the current direction. However, there are many variables you have to keep in mind such as volume or if any news is set to hit the wire in the coming days. Finding these candlestick patterns are helpful in identifying trends you should be watching, but they fail to recognize the fundamental aspect of a company.
If you are a trader then these patterns are going to work well for you because it may give you a jump on a potential trend change. For investors, you should be more concerned with the health of the company and their ability to grow and make money in the future. There is a difference between the two and it important to know which person you are in the market.
Be sure to test this out on a demo account to ensure you know it works well with your current setup without risking your capital. There are plenty of tools out there on the Internet so be sure to consume as much information as possible to fully understand how to identify and execute upon finding this candlestick pattern. Macroaxis has many wonderful tools that can help you grow as an investor and a finance person overall.