The On Neck Line pattern is almost a ‘meeting line pattern’, but the critical term is ‘almost’.
The ON Neck pattern does not reach the previous day’s close; it only reaches the previous
day’s low.
Criteria
1. A long black candle forms in a downtrend.
2. The next day gaps down from the previous day’s close; howver, the body is usally smaller
than one seen in the meeting line pattern.
3. The second day closes at the low of the previous day.
Pattern Psychology
After a market has been moving in a downward direction, a long black candle enhances the
downtrend. The next day opens lower, a small gap down, but the trend is halted by a move
back up to the previous day’s low. The buyers in this upmove should be uncomfortable that
threre was not more strength in the upm,ove. The sellers step back in the next day to continue the downtrend.