Takuri Line (Probing Line)

The Takuri Line (Probing Line) is a rare and powerful candlestick pattern that signals potential market reversals, especially after a strong downtrend. This comprehensive guide explores the Takuri Line in depth, covering its formation, psychology, practical trading strategies, and real-world coding examples for traders and developers.

Introduction

The Takuri Line, also known as the Probing Line, is a single-candle reversal pattern found at the bottom of downtrends. Its unique structure and psychological implications make it a valuable tool for traders seeking to identify exhaustion in selling pressure and anticipate bullish reversals. Originating from Japanese rice trading in the 18th century, candlestick charting has evolved into a cornerstone of modern technical analysis. The Takuri Line, though less famous than patterns like the Hammer or Doji, offers distinct advantages when used correctly in today's fast-paced markets.

What is the Takuri Line (Probing Line)?

The Takuri Line is characterized by a small real body near the top of the candle and a long lower shadow, with little or no upper shadow. This structure indicates that sellers pushed prices significantly lower during the session, but buyers managed to bring the price back near the opening level by the close. The pattern is most effective after a pronounced downtrend, where it signals that selling pressure may be exhausted and a reversal could be imminent.

• Open: Near the high of the session
• Close: Also near the high, forming a small real body
• Low: Significantly lower than the open/close, forming a long lower shadow
• High: Close to the open/close, minimal upper shadow

Historical Background and Origin

Candlestick charting was developed in Japan in the 18th century by Munehisa Homma, a legendary rice trader. The Takuri Line is one of the lesser-known but powerful patterns that emerged from this tradition. In Japanese, "Takuri" means "probing" or "sounding out," reflecting the pattern's role in testing the market's depth and resilience. Over centuries, this pattern has been used by traders to identify moments when the market is probing for a bottom, often preceding significant reversals.

Why the Takuri Line Matters in Modern Trading

In today's markets—whether stocks, forex, crypto, or commodities—volatility and rapid sentiment shifts are common. The Takuri Line stands out because it captures a critical psychological moment: the exhaustion of sellers and the emergence of buyers. When combined with other technical tools, it can provide high-probability entry points and improve risk management. Its rarity also means that, when it appears, it often carries more weight than more common patterns.

Formation and Structure: Anatomy of the Takuri Line

The Takuri Line's anatomy is precise. The real body is small and located near the candle's high, while the lower shadow is at least twice the length of the real body. The upper shadow is minimal or absent. This configuration shows that, despite aggressive selling, buyers regained control by the close. The color of the real body can be bullish (white/green) or bearish (black/red), but a bullish body is generally considered stronger.

Psychology Behind the Pattern

The Takuri Line reflects a battle between buyers and sellers. During its formation, sellers dominate early, pushing prices down. However, buyers step in aggressively, absorbing the selling pressure and driving the price back up. This shift often signals that the downtrend may be losing momentum. Retail traders may see the long lower shadow as a sign of panic selling, while institutional traders recognize it as a potential accumulation zone. Emotions such as fear and uncertainty are prevalent during the formation, but the recovery by buyers introduces hope and the possibility of a reversal.

Types and Variations

The Takuri Line belongs to the family of hammer-like patterns, including the Hammer and Dragonfly Doji. Strong signals occur when the lower shadow is exceptionally long and the real body is very small. Weak signals may arise if the lower shadow is not significantly longer than the body or if the pattern appears in a sideways market. False signals and traps are common, especially in volatile markets. Traders should be cautious of patterns that form during low volume or without confirmation from subsequent price action.

Chart Examples and Market Context

In an uptrend, the Takuri Line is rare but can signal a continuation after a brief pullback. In a downtrend, it often marks the potential bottom. In sideways markets, its reliability decreases. On smaller timeframes (1m, 15m), the pattern may appear frequently but with less reliability due to noise. On daily and weekly charts, the Takuri Line carries more weight and can signal significant reversals.

Practical Applications: Trading the Takuri Line

Traders use the Takuri Line to identify potential entry points after a downtrend. A common strategy is to enter a long position on the next candle if it closes above the high of the Takuri Line. Stop losses are typically placed below the low of the pattern to manage risk. Combining the Takuri Line with indicators such as RSI or moving averages can improve reliability. For example, if the RSI is oversold and a Takuri Line forms, the probability of a reversal increases.

• Identify a clear downtrend
• Look for a Takuri Line with a long lower shadow
• Wait for confirmation from the next candle
• Combine with indicators for higher probability
• Set stop loss below the low of the pattern
• Calculate risk/reward before entering
• Avoid trading the pattern in sideways markets

Backtesting and Reliability

Backtesting shows that the Takuri Line has a higher success rate in stocks and commodities compared to forex and crypto, where volatility can lead to more false signals. Institutions may use the pattern as part of a broader accumulation strategy, often waiting for additional confirmation before acting. Common pitfalls in backtesting include ignoring market context and failing to account for volume. Traders should always test the pattern across multiple markets and timeframes before relying on it.

Advanced Insights: Algorithmic and Quantitative Approaches

In algorithmic trading, the Takuri Line can be coded as a condition for potential long entries. Machine learning models can be trained to recognize the pattern and assess its reliability based on historical data. In the context of Wyckoff and Smart Money Concepts, the Takuri Line often appears during phases of accumulation, signaling the absorption of supply by strong hands.

Case Studies: Real-World Examples

Historical Example: In 2009, after the financial crisis, several major stocks formed Takuri Lines at their bottoms, signaling the start of a new bull market. For instance, Apple (AAPL) showed a textbook Takuri Line on the weekly chart before a significant rally.

Recent Crypto Example: In 2022, Bitcoin formed a Takuri Line on the daily chart after a sharp sell-off, leading to a multi-week recovery. This pattern was confirmed by increased volume and a bullish RSI divergence.

Comparison Table: Takuri Line vs. Similar Patterns

Common Mistakes and How to Avoid Them

• Entering without confirmation from the next candle
• Ignoring market context (trend, volume, volatility)
• Relying solely on the pattern without supporting indicators
• Risking too much on a single trade
• Trading the pattern in sideways or low-volume markets

Practical Guide for Traders

• Always confirm the pattern with subsequent price action
• Use stop losses to manage risk
• Combine with volume and momentum indicators
• Backtest the pattern on your preferred markets and timeframes
• Keep a trading journal to track performance

Code Examples: Detecting the Takuri Line in Multiple Languages

Below are real-world code examples for detecting the Takuri Line (Probing Line) pattern in various programming languages and trading platforms. Use these as a foundation for your own analysis or automated strategies.

// C++ Example: Detect Takuri Line
bool isTakuriLine(double open, double close, double high, double low) {
    double realBody = fabs(close - open);
    double upperShadow = high - std::max(close, open);
    double lowerShadow = std::min(close, open) - low;
    return (lowerShadow > 2 * realBody) && (upperShadow <= realBody * 0.2);
}

# Python Example: Detect Takuri Line
def is_takuri_line(open_, close, high, low):
    real_body = abs(close - open_)
    upper_shadow = high - max(close, open_)
    lower_shadow = min(close, open_) - low
    return lower_shadow > 2 * real_body and upper_shadow <= real_body * 0.2

// Node.js Example: Detect Takuri Line
function isTakuriLine(open, close, high, low) {
  const realBody = Math.abs(close - open);
  const upperShadow = high - Math.max(close, open);
  const lowerShadow = Math.min(close, open) - low;
  return lowerShadow > 2 * realBody && upperShadow <= realBody * 0.2;
}

//@version=6
indicator("Takuri Line (Probing Line) Detector", overlay=true)
realBody = math.abs(close - open)
upperShadow = high - math.max(close, open)
lowerShadow = math.min(close, open) - low
isTakuri = (lowerShadow > 2 * realBody) and (upperShadow <= realBody * 0.2)
plotshape(isTakuri, style=shape.triangleup, location=location.belowbar, color=color.green, size=size.small, title="Takuri Line")
alertcondition(isTakuri, title="Takuri Line Alert", message="Takuri Line detected!")

// MetaTrader 5 Example: Detect Takuri Line
bool isTakuriLine(double open, double close, double high, double low) {
   double realBody = MathAbs(close - open);
   double upperShadow = high - MathMax(close, open);
   double lowerShadow = MathMin(close, open) - low;
   return (lowerShadow > 2 * realBody) && (upperShadow <= realBody * 0.2);
}

These code snippets check for a small real body near the high, a long lower shadow, and minimal upper shadow. When the conditions are met, the Takuri Line is detected. You can use these functions in your trading algorithms or charting tools to highlight potential reversal points.

Conclusion

The Takuri Line (Probing Line) is a powerful reversal pattern when used correctly. Its effectiveness increases when combined with other technical tools and proper risk management. Traders should trust the pattern in clear downtrends and with confirmation, but remain cautious in choppy or low-volume markets. Mastery of the Takuri Line can add a valuable tool to any trader's arsenal. Always backtest and confirm before acting, and remember: no single pattern guarantees success, but the Takuri Line is a proven ally in the search for market reversals.