[ad_1]
Bearish Hikkake Candle Pattern
The bearish hikkake candlestick pattern resembles a three inside up candle pattern but without the constraints. The bearish hikkake doesn’t require a falling price trend nor is candle color important as they both are in the three inside up candlestick.
Bearish Hikkake Candlestick: Important Results
I setup my program to find hikkake’s based on a confirmed bearish hikkake pattern shown in the figure to the right. That includes the 3-bar hikkake and up to 3 additional days for confirmation. However, all of the numbers assume that confirmation occurs when price closes below the bottom of the 3-bar candle or above the top of the 3-bar hikkake pattern. That is how I measured the performance of all other candlestick types. Theoretical performance: bearish when confirmed (but can act as a reversal or continuation) Tested performance: bearish continuation 50% of the time. Frequency rank: 18 Overall performance rank: 83 (1 is best out of 105) Best percentage meeting price target: 58% (bear market, down breakout) Best average move in 10 days: -5.65% (bear market, down breakout) Best 10-day performance rank: 15 (bear market, down breakout) The above numbers are based on hundreds of perfect trades. See the glossary for definitions. |  Bearish Hikkake
Bearish Hikkake, Confirmed |
In theory, the bearish hikkake is supposed to be a bearish candlestick, but it can act either as a reversal or continuation of an existing price trend. That’s what I found, too. My numbers say the confirmed pattern is a continuation 50% of the time (random), with downward breakouts more than twice as likely to occur as upward ones (13,333 vs 6,666 samples). That shouldn’t be a surprise because price is probably closer to the bottom of the confirmed candle than the top.
Bearish Hikkake Candlestick: Discussion
The bearish hikkake is plentiful, so plentiful that I limited samples to 20,000. It ranks 18th out of 105 candle types, where 1 has the highest frequency.
The best average move 10 days after price closed above the top of the highest high or below the lowest low in the 3-bar candlestick was 5.65% in a bear market after a downward breakout. That performance ranks 15th where 1 is best out of 105 candles, and that’s quite good.
Bearish Hikkake Candlestick: Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | Three. |
| Price trend leading to the pattern | None |
| Configuration | Look for an inside day (lower high and higher low compared to the prior day) followed by a higher high and high low. Candle color is not important for identification. |
| Confirmation | Price must drop below the low of the inside day — the second candle of the pattern — in three days or less, after the candle ends. See the ideal picture of “bearish Hikkake, Confirmed” above. The red candle confirms the pattern on the third day when the low of that day drops below the blue line. The blue line touches the bottom of the inside day. |
Bearish Hikkake Candlestick: Trading Tidbits
- Performance for tall bearish hikkake candles is best in a bear market with average declines of 11.83%% logged. Tall means taller than 5.23% of breakout price divided by the height of the 3-bar pattern. Price after short hikkake candles drop just 7.56%, which is good, too. No other combination of up/down breakouts and bull/bear markets compete with the performance numbers.
- Breakouts below a 50-bar exponential moving average result in better performance in bear markets after downward breakouts: 10.54% versus 8.11%.
Bearish Hikkake Candlestick: Example
The chart on the right shows a bearish hikkake in the Dow industrials (^DJI). I show the candle in the inset and it appears beginning at point A.
Starting from A, the first two days comprise the inside day followed by a higher high and higher low. Then this candle example moves sideways until candle B, which confirms the bearish hikkake by closing below the inside day (the candle line after A).
[ad_2]
