What Is a Hook Reversal?

Hook reversals are short-term candlestick patterns that predict a reversal in the trend's direction. The pattern occurs when a candlestick has a higher low and a lower high than the previous session's candlestick. This pattern differs from 澳洲幸运5官方开奖结果体彩网:engulfing patterns in that the size dif🐭ference between the first and second bar's body can be rel𒀰atively small.

How a Hook Reversal Works

Hook reversal patterns are popular candlestick patterns among 澳洲幸运5官方开奖结果体彩网:active traders since they occur fairly frequently and are relatively easy to spot since the second candlestick changes to the opposite color. The strength and reliability of the pattern often depends on the strength of the uptrend or downtrend that preceded it, and most traders use other candlestick patterns, chart patterns, or 澳洲幸运5官方开奖结果体彩网:technical indicators as confirmation of a reversal. After all, the pat🍃tern occurs relatively frequently, which leads to many false positives that must be discounted.

Hook reversal patterns are often classified as a type of harami or 澳洲幸运5官方开奖结果体彩网:engulfing because the real body of the second candle forms within the body of the previous candle. They are also similar to 澳洲幸运5官方开奖结果体彩网:dark cloud cover patterns where both real bodies are similar length. The key difference is that hook reversal patterns only require a small size difference, whereas harami and engulfing patterns emphasize large differences in sizes between candlesticks. In general, harami and e�ღ�ngulfings tend to be less common and more accurate than hook reversal patterns in predicting a trend reversal.

Examples of Hook Reversals

Hook reversal patterns can be either bullish or bearish reversal patterns:𓄧

• Bearish hook reversals occur at the top of an uptrend when the open of the second candle is near the high of the first candle and the close of the second candle is near the low of the first candle. In other words, bulls are in control of the market early on before bears regain control and send the price sharply lower during the session.
• Bullish hook reversals occur at the bottom of a 澳洲幸运5官方开奖结果体彩网:downtrend when the open of the second candle is near the low of the first candle and the second handle is near the high of the first candle. In other words, bears are in control of the market early on before bulls regain control and send the price sharply higher during the session.

Traders should set 澳洲幸运5官方开奖结果体彩网:take-profit and 澳洲幸运5官方开奖结果体彩网:stop-loss points for these reversals based on other technical indicators or chart patterns since hook reversals only indicate that a potential reversal is about to take place without providing insight into the magnitude of the reversal♑.