What it looks like
It forms after a clear rise. Candle one is a long up candle. Candle two is also an up candle, but its whole body sits inside candle one's body: it opens above candle one's open and closes below candle one's close. The pattern's high is the higher of the two highs and its low is the lower of the two lows. It is rare unless the market gaps, because candle two must open back inside candle one.
What it means
Buyers were in control during the long first candle. On the second they still closed up, but the move was small and could not reach the first candle's close. The rise is losing energy. It is a hesitation, not a turn, so it is one of the gentler signals and needs a seller's close below the pattern first.
How to trade it
- 1
Check the setting: price should have been rising, ideally into a ceiling or a level that mattered before.
- 2
Do not trade it on its own. Wait for a later candle to close below the pattern's low.
- 3
Sell on that close, for example on the US30 15 minute chart where a descending hawk spans 40 points and the next candle closes below its low.
- 4
Put the stop just above the pattern's high, about 40 to 45 points of risk in that example.
- 5
Aim for the nearest swing low or 2 times the stop, whichever comes first.
A close above the pattern's high. The buyers have pushed past the whole pattern and the hesitation is over.
Where it works best
After a clear rise into a ceiling such as a previous day high, a pivot level or a round number. It is more useful on 15 minute charts and higher.
WickSpeak finds the descending hawk automatically on any chart and names it on the candles that made it. Next to the name it writes what the pattern is, how to trade it and what proves it wrong, in plain English. In Playbook you can use the descending hawk, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, then backtest it on past candles with your own costs.
Common mistakes
- Selling the second up candle before any close below the pattern's low.
- Reading it as a strong top. It is only a hint the rise is tiring.
- Ignoring it is rare outside gapping markets and forcing the label onto shapes that do not fit.
Related patterns
Questions traders ask
Is the descending hawk bullish or bearish?
It is bearish. It appears after a rise and hints the buyers are tiring. It needs a close below the pattern's low before it is worth acting on.
Is the descending hawk the same as a bearish harami?
They are close cousins. In a bearish harami the small inside candle is usually a down candle, while in a descending hawk both candles are up candles. The trade and the stop are the same.
What proves a descending hawk wrong?
A close above the pattern's high. That means buyers have pushed beyond the whole pattern, so the warning has failed.
What timeframe is best for the descending hawk?
It means more on 15 minute, 1 hour and higher charts. On very short charts small inside candles appear constantly and carry little weight.