Developer: Dan Chesler, CTM, CTA. Concept: Trading strategy based on false breakouts.

Research
Goal: Performance verification of the hikkake pattern. Trade Setup: Long Trades: The bullish hikkake
pattern (a.k.a. the bullish “inside day false breakout”) consists of two price bars. The first bar is an
inside bar. The second bar has a lower high and a lower low than the first bar. Short Trades: The
bearish hikkake pattern (a.k.a. the bearish “inside day false breakout”) consists of two price bars.
The first bar is an inside bar. The second bar has a higher high and a higher low than the first bar.
Trade Entry: Long Trades: A buy stop is placed one tick above the high of the inside bar in the bullish
hikkake pattern. Short Trades: A sell stop is placed one tick below the low of the inside bar in the
bearish hikkake pattern. The signals must be generated within three bars of the hikkake pattern.
Portfolio: 42 futures markets from four major market sectors (commodities, currencies, interest
rates, and equity indexes). Data: Since 1980. Testing Platform: MATLAB®.
Long Trades:
The bullish hikkake pattern (a.k.a. the bullish “inside day false breakout”) consists of two price bars.
The first bar is an inside bar (i.e. High[i − 1] < High[i − 2] and Low[i − 1] > Low[i − 2]; Index: i ~
Current Bar). The second bar has a lower high and a lower low than the first bar (i.e. High[i] < High[i
− 1] and Low[i] < Low[i − 1]; Index: i ~ Current Bar).

Short Trades:
The bearish hikkake pattern (a.k.a. the bearish “inside day false breakout”) consists of two price
bars. The first bar is an inside bar (i.e. High[i − 1] < High[i − 2] and Low[i − 1] > Low[i − 2]; Index: i ~
Current Bar). The second bar has a higher high and a higher low than the first bar (i.e. High[i] >
High[i − 1] and Low[i] > Low[i − 1]; Index: i ~ Current Bar).
Long Trades:
Close[i] ≥ Close[i − Trend_Index].
Index: i ~ Current Bar.

Short Trades:
Close[i] ≤ Close[i − Trend_Index].
Index: i ~ Current Bar.

Note: If Trend_Index = 0 then the trend filter is turned off.

Long Trades:
A buy stop is placed one tick above the high of the inside bar in the bullish hikkake pattern. The
signal must be generated within three bars of the hikkake pattern.

Short Trades:
A sell stop is placed one tick below the low of the inside bar in the bearish hikkake pattern. The
signal must be generated within three bars of the hikkake pattern.
Time Exit: nth day at the close.
Pattern Exit: Long Trades: A sell stop is placed one tick below the lowest low of the pattern (the
period between the first bar of the hikkake pattern and the entry bar). Short Trades: A buy stop is
placed one tick above the highest high of the pattern (the period between the first bar of the
hikkake pattern and the entry bar).
Stop Loss Exit: ATR(ATR_Length) is the Average True Range over a period of ATR_Length. ATR_Stop is
a multiple of ATR(ATR_Length). Long Trades: A sell stop is placed at [Entry − ATR(ATR_Length) *
ATR_Stop]. Short Trades: A buy stop is placed at [Entry + ATR(ATR_Length) * ATR_Stop].
Test Setup: https://oxfordstrat.com/trading-strategies/hikkake-pattern/
Test Setup: https://oxfordstrat.com/trading-strategies/hikkake-pattern/
Test Setup: https://oxfordstrat.com/trading-strategies/hikkake-pattern/
Test Setup: https://oxfordstrat.com/trading-strategies/hikkake-pattern/
Test Setup: https://oxfordstrat.com/trading-strategies/hikkake-pattern/
Test Setup: https://oxfordstrat.com/trading-strategies/hikkake-pattern/
Test Setup: https://oxfordstrat.com/trading-strategies/hikkake-pattern/
Test Setup: https://oxfordstrat.com/trading-strategies/hikkake-pattern/
• The longer holding period is preferred.
• The trend filter seems redundant.
• The Hikkake Pattern can be further developed to become part of a multi-pattern trading strategy.
Oxford Capital Strategies Ltd.
30 Bankside Court
Stationfields
Kidlington
Oxford, OX5 1JE
United Kingdom

info@oxfordstrat.com
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