The Hikkake pattern is a lesser-known but effective candlestick pattern used in technical analysis, primarily by traders to identify potential market reversals or continuations. The term "Hikkake" comes from the Japanese word for "trick" or "trap," reflecting the pattern's nature of luring traders into potentially false moves before the market goes in the opposite direction. Structure of the Hikkake Pattern: Inside Bar Formation: The pattern begins with an "inside bar" setup, where a candlestick's high and low are entirely within the range of the previous candlestick. This represents market consolidation or indecision. Breakout : After the inside bar, the price breaks out either above or below the range of the inside bar. Traders often interpret this as a signal for a move in that direction. Trap : Instead of continuing in the direction of the breakout, the price reverses, moving back into the range of the inside bar, trapping those who...
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