What it looks like
Price is falling. Candle one is a long down candle. Candle two is an up candle that opens below candle one and closes a little inside candle one's body, just above its close. The bounce recovers only a sliver. The pattern runs from the high of the first candle to the low of the second.
What it means
Sellers made a strong candle. Buyers then pushed back, but only just into the bottom of it. The fall paused and sellers came straight back. It says the trend is still in charge and the pause was only a rest. In a sideways market it means nothing.
How to trade it
- 1
Confirm the fall: lower highs and lower lows. Ignore it in a sideways market.
- 2
Sell when price closes below the pattern's low.
- 3
Example: on the US30 1 hour chart in a downtrend, an in-neck spans 70 points; a close below its low is the sell.
- 4
Stop just above the pattern's high, about 70 to 75 points in that example.
- 5
Target the next swing low or 2 times the stop.
A close above the pattern's high.
Where it works best
In an established downtrend on 15 minute and higher charts, on a pause just under a floor that has broken.
WickSpeak finds the in-neck 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 in-neck, 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
- Buying the up candle as a reversal.
- Labelling a deep bounce as an in-neck when the close is well into the first body.
- Trading it when there is no fall behind it.
Related patterns
Questions traders ask
Is the in-neck pattern bullish or bearish?
It is bearish. It appears in a fall and says the trend will likely carry on after a weak bounce.
What is the difference between in-neck and on-neck?
The on-neck bounce closes at the first candle's low. The in-neck bounce closes just inside the first candle's body. The trade is the same: with the trend.
What cancels an in-neck?
A close above the pattern's high. Buyers have then taken back the whole pattern.
Which timeframe suits the in-neck?
15 minute and higher charts in a clear trend. On very short charts the shape appears often and carries little weight.