What is Hikkake Pattern in Forex ?

The Hikkake Pattern is a more variable candlestick formation in that it can indicate either reversals or continuations, depending on the overriding trend seen in the market. The pattern is sometimes referred to by other names, such as an Inside False Breakout or a simple Fake Out but since these terms can also apply to other patterns, the term Hikkake is generally preferred. 



The pattern is made up of a period of stalling (a contraction in volatility), which is then followed by a short-lived price move that initially fools unsuspecting traders with respect to the next major price direction. However, like the other patterns, the Hikkake should not be viewed as a stand-alone signal capable of generating trades on its own.

There is a bullish and bearish version of the pattern. In both cases, the first candle is an Inside Bar (higher low and lower high, relative to the previous unit). Then, we see a candle with a higher low/higher high (for the bearish pattern), or a candle with a lower low/lower high (for the bullish pattern). Confirmation that a true pattern signal has been generated comes when price falls below the low seen in the first candle (in the bearish pattern), or when prices rise above the high seen in the first candle (for the bullish pattern). This confirmation must be seen within three candles of the last bar, or the signal becomes invalid.