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The Hikkake pattern, a candlestick pattern with the potential to identify market trend reversals or continuations, was crafted by the astute trader Daniel L. Chesler. This pattern, which was first introduced to the trading community in the September 2004 edition of Active Trader Magazine, marked a significant milestone in the world of technical analysis.
The Hikkake pattern is formed by a sequence of candles indicating a potential market direction change. The pattern consists of three main components:
In Bullish Hikkake, the initial trend is downward or bearish. The inside bar is followed by a bearish candle that breaks below its low. However, instead of continuing downward, the price reverses and closes above the inside bar’s high, signalling a potential reversal to the upside.