Bearish On Neck Pattern

by · December 31, 2009

BEARISH ON NECK PATTERN (BONP)
an uncomfortable bearish situation

Characteristics:
1. Market is on a downward trend;
2. Day 1 has a long black stick;
3. Day 2 has white stick which opens below the low of Day 1. Day 2 does not need to be a long day; and
4. The closing price of Day 2 is almost the same (or exactly the same) as the low price of Day 1.

Brief Explanation:
The BONP is a similar to the Bulling Piercing Line Pattern, except that the Day 2’s white body only gets up to Day 1’s low. The BONP normally appears during decline and downtrend periods. The bearish sentiment increases with the long black Day 1. The market then shows a gap down on Day 2, but it cannot continue the downtrend. So the prices start moving up but they stop at Day 1’s low price. This bearish situation is not comfortable for the possible bottom pickers. The downtrend movement may continue for a short time.

Notes:
1. If the low of the white stick is broken down, the market goes further down
2. The BONP is different from the Bulling Meeting Lines Pattern
3. A confirmation on Day 3 is required in the form of a black stick, a gap down or a lower close.