In Neck Pattern

DEFINITION of 'In Neck Pattern'

The in-neck pattern is a two-candle bearish continuation pattern that appears on candlestick charts.

BREAKING DOWN 'In Neck Pattern'

The in-neck pattern is a continuation pattern, where:

  • The market is in a downtrend;
  • The first candle is black with a long real body;
  • And, the second candle is white with a close near the first candle’s close and an open that's below the first candle’s low. This candle’s real body and shadows can take a variety of different forms, ranging from a hammer to a doji.

The chart pattern shows bulls attempting a rally that loses momentum and fails to reverse the trend. After failing to breakout from the first candle’s lows, the bears regain control over the market and send prices lower.

The in-neck­ pattern is very similar to the on-neck pattern, where the second candle closes below the first candle’s close. But, the on-neck pattern is often more reliable than the in-neck pattern, but both perform at close to a coin flip. The morning star pattern is a similar candlestick pattern that has much better accuracy in action.

Traders should use the in-neck pattern along with other forms of technical analysis, such as chart patterns or technical indicators, to maximize their odds of success.