On Neck

“On Neck” is a technical analysis pattern that is observed in financial markets. It is a variation of the “Neckline” pattern.

The “On Neck” pattern occurs in a downtrend and is considered a bearish continuation signal. It consists of two candlesticks:

1. First Candlestick: The first candlestick is a long bearish candle that represents the ongoing downtrend. It indicates that selling pressure is still dominant in the market.

2. Second Candlestick: The second candlestick opens below the closing price of the previous candlestick and closes at or near its low. It signifies that the downtrend is likely to continue.

The “On Neck” pattern suggests that the downward momentum is likely to persist. It indicates that sellers are still in control and that the market is likely to continue moving downwards.

Traders and analysts use the “On Neck” pattern as a signal to enter or maintain short positions, expecting the downtrend to continue. However, it is essential to confirm the pattern with other technical indicators or tools to increase the reliability of the signal.

As with any technical analysis pattern, it is crucial to consider other factors and use additional confirmation techniques to validate the pattern. Traders often combine the “On Neck” pattern with other chart patterns, trendlines, or indicators to make more informed trading decisions.

In summary, the “On Neck” pattern is a bearish continuation pattern observed in a downtrend. It consists of two candlesticks, with the second candlestick opening below the previous candlestick’s closing price and closing near its low. This pattern suggests that the downtrend is likely to persist, but it is recommended to confirm the pattern using other technical analysis tools and indicators.