On-neck candlestick pattern: when the old low becomes a ceiling

In an on-neck line, yesterday's low turns into today's ceiling. The first candle is a long black (red) session in a falling market. The next session opens below that candle's low, climbs during the day, and closes right back at the low it gapped under, not an inch into the black body. On a chart the small white candle looks like it is pressed up against the bottom of the big black one.

Of the three "neck" patterns, the on-neck shows the feeblest recovery. The In-neck candlestick pattern: a bearish continuation line line at least claws back to the prior close, and the Thrusting candlestick pattern: rules, examples and real results line gets partway into the black body. The on-neck only gets back to where the previous day's selling bottomed out. In candlestick theory that is a sign the decline has plenty left in it.

Our own data does not back that theory up very well, and this page is candid about it. You will find the anatomy, TA-Lib's exact test, a case from Merck that followed the script and one from Intel that did not, a look at how 82 on-necks across 43 large US stocks behaved, and how the pattern feeds Finabase's scanner and gauge.

How an on-neck line is built

Four prices carry the whole pattern:

• The black candle's low. This becomes the reference level.
• The white candle's open, which must sit below that low. Overnight, sellers pushed the market to a fresh low for the move.
• The white candle's close, which must land back at the black candle's low.
• The black candle's body, which must be long, so that the decline is clearly in force when the pattern forms.

The Japanese name is commonly given as ate kubi. The white candle's close only "touches the neck", meeting the previous low without entering the body above it.

The exact rules Finabase uses

The On-Neck Pattern study on Finabase charts runs TA-Lib's CDLONNECK. Its conditions:

How on-neck differs from in-neck and thrusting in code

All three functions share the long black first candle, the white second candle and the open below the first low. They split on the white candle's close:

• On-neck: a two-sided band around the black candle's low. The close may even finish a little below the low, which a strict reading of the textbook would not allow.
• In-neck: a one-sided band from the black candle's close up to 5% of the average range above it.
• Thrusting: above that in-neck band, up to the midpoint of the black body.

On a stock that has been moving about $2.40 a day, as Merck was in early April 2025, the on-neck band is roughly 12 cents either side of the low.

What the code does not test

No downtrend is required. TA-Lib's source notes the pattern is significant in a downtrend and then explicitly ignores it, so 28 of our 79 measured on-necks with ten sessions of history came after a ten-session rise. And when a black candle closes at its low, its close and its low coincide, so one white candle can satisfy the on-neck and in-neck bands at once: six bars in our data were flagged by both.

The reasoning behind the bearish label

A falling market gaps lower. Bargain hunters or short sellers taking profits lift price through the day, which feels encouraging. But the rally stops at the level where the previous session found its low. That price had been support yesterday; today it acts as resistance. Buyers did not recover a single cent of the long black body.

The traditional conclusion is that sellers remain in charge and that the bounce was only a pause, so the decline should continue. The weakness of the rally is the point: the less ground the white candle recovers, the more bearish the pattern is supposed to be. That is why the on-neck is often described as the most bearish of the three neck lines.

Confirming the continuation

The on-neck predicts that the decline resumes, so look for sellers to reassert themselves:

• A close below the white candle's low within the next session or two, the rule used in our test.
• Failure at the same level again, with price rising to the old low on a later day and being turned back.
• Weak momentum: an Relative Strength Index (RSI): how to read and use it that stays below 50 rather than turning up from oversold. An RSI already below 30 is a warning that the market may be too stretched for continuation.

A decisive close back inside the black body, and especially above its midpoint, says the bounce was more than a pause.

Two real on-neck lines

Merck, April 7, 2025. MRK had fallen 12.1% in ten sessions when it closed April 4 at $81.47 after a long black session with a low of $81.08. On April 7, a day of wild swings across the whole market, it opened at $81.01, just under that low, and closed at $81.18, ten cents above it. The next day MRK closed at $78.95, below the white candle's $79.30 low, confirming the pattern. Ten sessions later it was 2.7% below the on-neck close. A modest win for the textbook.

April 7, 2025 also shows a weakness of judging patterns one at a time. TA-Lib flagged on-necks that same day on Oracle, AMD and the financial-sector ETF XLF. Two days later the US paused most of its new tariffs and the market jumped; all three were higher ten sessions on. Patterns that cluster on one market-wide day are really one bet on the market, not several independent signals.

Intel, November 14, 2025. After an 11.2% slide, INTC printed a black candle on November 13 (open $37.27, close $35.91, low $35.45). On November 14 it opened at $35.03 and closed at $35.52, seven cents above the low and right at the edge of a band that was only about seven cents either side. Five sessions later the stock was 2.9% lower, so a one-week view would score it a success. The next session closed at $34.71, nine cents above the white candle's $34.62 low, so it missed confirmation under our rule, and by the tenth session INTC had rallied to 12.6% above the pattern close. The horizon you choose can turn the same pattern from a hit into a miss.

What 82 on-neck lines did next

We ran CDLONNECK over daily bars from October 30, 2024 to October 29, 2026 for 60 large US stocks and ETFs. It fired 82 times on 43 of them; 80 cases had ten sessions of later data. For a bearish pattern, success means a lower close, so the baseline is the 46.7% of all days that were lower five sessions later.

The label and the averages disagree. Half of all on-necks were lower a week later, only slightly more than for a random day, while the average on-neck was followed by a gain of 0.71% over five sessions and 1.33% over ten, both above the baseline. A few sharp rebounds, like the April 2025 group, outweighed many small declines.

Trend context mattered more than the shape. Inside an existing decline, 56.9% of on-necks were lower after a week, a respectable result, yet even there the average return was slightly positive. On-necks after a rise, which the textbook would not count at all, were lower only 39.3% of the time.

Confirmed cases looked bearish, on tiny numbers. The 11 on-necks followed by a close below the white candle's low went on to fall in 8 cases, an average loss of 1.21% from the confirming close. Eleven cases cannot carry a conclusion.

On-neck compared with related patterns

An educational outline built around the old low

How a practitioner might use the pattern's levels. It is not a recommendation.

1. Confirm the setting: a decline in progress, with the on-neck forming near the lows of the move.
2. Mark the black candle's low. The pattern says it is now resistance.
3. Look for continuation, such as a close under the white candle's low.
4. Place the invalidation above the black candle's midpoint, where the resistance idea would plainly have failed, and size from that distance.

How Finabase shows on-neck lines

• On the chart. The On-Neck Pattern study marks each white candle where TA-Lib returned −100. The MRK link at the top of this page opens it.
• In the scanner. Each detection is sorted by the sign of TA-Lib's output, and CDLONNECK only produces −100, so on-necks are always on the Bearish list, including ones that appear after a rally.
• In the Signals-tab gauge. On a symbol's Signals tab, each of the 61 candlestick patterns contributes the sign of its latest non-zero reading in the past 8 bars: Buy, Sell or, with none, Neutral. A recent on-neck is a Sell vote. The group score is (buy − sell) ÷ (buy + sell + the smaller of the neutral count and the larger side); scores under −0.2 read Sell and under −0.6 Strong Sell.

Frequently asked questions

Is an on-neck line bullish or bearish?

It is traditionally bearish, a continuation pattern in a downtrend. In our two-year sample of large US stocks, though, the average on-neck was followed by a small gain.

What is the difference between on-neck and in-neck?

Where the white candle closes. The on-neck closes at the black candle's low; the in-neck closes higher, at or just above the black candle's close.

Can the white candle close below the prior low?

In TA-Lib, slightly. The function accepts a close up to 5% of the recent average daily range below the black candle's low as well as above it.

Does TA-Lib check for a downtrend before an on-neck?

No. The function only examines the two candles. Whether a decline came first is up to you, and our data suggests it matters.

Summary

The on-neck line is a gap-lower open and a rally that stops at the prior session's low, the smallest recovery a white candle can make and still count as a neck pattern. Theory calls it bearish. In 80 measured cases on large US stocks it was lower a week later only half the time and, on average, followed by gains, with better results only inside established declines and among a handful of confirmed cases. Use the old low as a level to watch, judge the trend yourself, and do not treat the shape as a forecast.