
Hikkake Pattern Indicator
Platform: MT4 Type: Pattern Last update: November 11, 2024The Hikkake Pattern Indicator for MT4 is a forex technical analysis indicator used for the identification of short-term trends and it’s available for free download. It’s based on the concept of “false breaks” which is typically used by reversal traders. Such an approach is particularly effective during sideways market conditions.
Are you a fan of reversal strategies? If so, let’s take a closer look at it and bring some practical trading examples.
The concept behind the Hikkake Pattern Indicator
The general idea behind that forex indicator is that price makes a false breakout from a rangebound, only to quickly reverse and move in the original direction. This action creates a so-called hikkake pattern on the chart and this name means a “trap” in Japanese.
As you can see, it consists of two moving average lines, where one is solid and the second is dotted. During an uptrend, a selling opportunity occurs when the price touches or crosses below the dotted line. Conversely, the price crossing above the dotted line is an indication of a potential buying opportunity. Usually, the profit target is a few candles above or below after crossing the opposite blue line.
An aspect worth paying attention to is the distance between these two lines. The higher the gap, the better. Avoid trading during the very tight alignment of these two.
Settings
There are quite a few variables you can customize to fit your preferences or your trading strategy.
How To Trade With The Hikkake Pattern Indicator?
Generally speaking, the signal trigger is based on false breakouts and then a real reversal. Let’s deep dive into how to exactly use that forex indicator in a few easy steps.
Buy Signal
- Dotted line is below the solid line
- Price touches or crosses above the dotted line
- Distance between two lines is big enough
- Open long trade when the above conditions are met
- Set stop loss a few pips below the most recent market’s low point
- Take minimum profit after crossing the solid line, but often the price still rises for a few candles
Sell Signal
- Dotted line is below the solid line
- Price touches or crosses above the dotted line
- Distance between two lines is big enough
- Open short trade when the above conditions are met
- Set stop loss a few pips above the most recent market’s high point
- Take minimum profit after crossing the solid line, but often the price still falls for a few candles
Conclusion
The MT4 Hikkake Pattern indicator is one of the most well-known reversal patterns and it’s definitely worth utilizing in your trading endeavor. It can be applied to any currency pair and time frame, but we suggest using it on intraday charts. We think it’s a good fit for rather knowledgeable traders but after some little training, beginners may succeed too.
It would be a good idea to use it in conjunction with some technical analysis forex indicators defining sideways market conditions like MACD Flat Trend Detector.
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