The Hikkake: Warning or Noise?

The Hikkake is a trap pattern that appears when a small inside bar is followed by a break that quickly reverses and moves in the opposite direction.

What the pattern is

It begins with a bar that sits completely inside the range of the bar before it, wicks included. The next bar then breaks that range, but the move is short-lived. Price turns back and travels through the far side of the inside bar, showing that the initial break was only a probe.

What forms it

The inside bar sets the boundaries. The break that follows is the lure. When that break fails and price returns past the opposite extreme of the inside bar, the trap is complete. The pattern is defined by the failure of the first directional move rather than by the break itself.

What confirms it

Confirmation comes only after the return clears the far side of the inside bar. The failure must happen quickly; a slow drift back does not satisfy the pattern. Once price has crossed the far side, the trap is considered active.

How it fails

The pattern fails when the break does not reverse promptly or when the return never reaches the far side of the inside bar. In those cases the initial move simply continues and the trap does not trigger.