Charting  |  MAR 2011

What You Don’t Know About Candlesticks by Thomas N. Bulkowski

In writing my latest book, Encyclopedia Of Candlestick Charts, I made some startling discoveries. I used more than 4.7 million candle lines (price bars) for the research with data going back as far as the 1980s in hundreds of stocks, but not all stocks covered the entire period. Re v eRs a l s w i n One famous technical analyst wrote that continuations perform better than reversals. That would make sense, since it is easier for price to swim with the tide than against it. There is just one problem: That’s wrong. I tested this on thousands of chart patterns and candlesticks with similar results for each. Reversal candlestick patterns outperform continuations 59% to 41% of the time.

by Thomas Bulkowski