how a hook reversal works
hook reversal patterns are popular candlestick patterns among active traders since they occur fairly frequently and are relatively easy to spot since the second candlestick changes to the opposite color the strength and reliability of the pattern often depends on the strength of the uptrend or downtrend that preceded it and most traders use other candlestick patterns chart patterns or technical indicators as confirmation of a reversal after all the pattern occurs relatively frequently which leads to many false positives that must be discounted hook reversal patterns are often classified as a type of harami or engulfing because the real body of the second candle forms within the body of the previous candle they are also similar to dark cloud cover patterns where both real bodies are similar length the key difference is that hook reversal patterns only require a small size difference whereas harami and engulfing patterns emphasize large differences in sizes between candlesticks in general harami and engulfings tend to be less common and more accurate than hook reversal patterns in predicting a trend reversal examples of hook reversalshook reversal patterns can be either bullish or bearish reversal patterns traders should set take profit and stop loss points for these reversals based on other technical indicators or chart patterns since hook reversals only indicate that a potential reversal is about to take place without providing insight into the magnitude of the reversal 