Are you hooked on Bearish Hook Reversal patterns? Probably not, but even so, it never hurts to add another candlestick signal to your repertoire. The Bearish Hook Reversal is considered an advanced candlestick pattern, which means that it offers a higher degree of reliability and can be combined with gaps to form profitable trading strategies. It is a short-to-medium pattern that signifies that a reversal will soon be on the way. If you want to hook a Bearish Hook Reversal, scroll down to learn what to look for and what to expect afterward.

Bearish Hook Reversal Pattern

Formation

The Bearish Hook Reversal pattern is easy to spot and wonderfully reliable. Just focus on the two candles that make up the pattern, and look for the following criteria:

First, an uptrend must be in progress. Second, the pattern should be composed of two candlesticks. Third, the second candle must be inside the trading range of the first candle. Fourth and finally, the second candle must have a higher low and a lower high than the first candle. Thus, it will change the color trend from green (or white) to red (or black).

This signal is unique because, unlike many other patterns which feature one candle “engulfing” the other, the two candles in a Bearish Hook Reversal are not very different in size. The first candle does not need to “engulf” the second.

In addition, note that the Bearish Hook Reversal has a brother: the Bullish Hook Reversal. So if you spot a similar pattern with the opposite formation (an established downtrend followed by two candles, and the second candle has a lower high and a higher low than the first), check to see if it is the bullish form of the Hook Reversal.

Meaning

The Bearish Hook Reversal pattern starts with an uptrend, which means that the bulls have control of the market. However, at the short-term peak of the trend, we have a reversal. The second candle has a higher low and a lower high than the first. The bears have gained control, forming a downtrend.

As we’ve mentioned, the Bearish Hook Reversal is an advanced candlestick, which means that it is very reliable. However, to use it effectively when trading, pair it with other indicators. In addition, note that Bearish Hook Reversal patterns are most trustworthy if they occur after a strong uptrend. Finally, for best results, the second candle should have a high volume.

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Before you throw your all at this pattern—hook, line, and sinker—be sure to confirm your inklings, checking that the reversal has sparked a downtrend. Confirming this pattern should give you the confidence you need to reel in the Bearish Hook Reversal pattern. Good luck!

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