Hikkake Pattern
Candlefocus EditorThe hikkake pattern comes in two variants: the hikkake bullish pattern and the hikkake bearish pattern. On a chart, the hikkake bullish pattern typically looks like an "M" pattern, with price action culminating in a shooting star or a doji. Conversely, the hikkake bearish pattern looks much more like a "W", with the price action climaxing with a hammer or a doji.
The hikkake pattern is typically used to identify a minor reversal in the market, and so traders may look for this setup to help identify possible stop-loss points, target levels, and entry points. Traders will typically consider a hikkake pattern broken if the price action breaks above the swing high of the second leg of the “M” or “W” pattern. Likewise, a trader may consider the hikkake pattern failed if the price action closes below the swing low of the second leg of the pattern.
The hikkake pattern works well in markets with a significant amount of psychological factors driving price action. However, traders should always use caution when entering any trade based on this, or any other technical pattern. As trading is unpredictable, there is no guarantee that a hikkake pattern will yield an accurate entry or exit signal. Additionally, like all technical analysis tools, the hikkake pattern should be used as part of an overall trading strategy and should not be relied on as a sole source of trade decisions.