JAPANESE CANDLESTICK PATTERNS EXPLAINED
This document describes in detail many of the most popular Japanese Candlestick patterns. In our application 64 Candlestick patterns have been
calculated for over 14,000 Stocks, ETF’s, and Indexes from 1988-2008. The data currently resides in a SQL Server database. Below is a screenshot
of what it looks like in its raw form. These historical candlestick patterns are now being compared with one another in order to find those which
have tended to be the most accurate with regard to future price movement. We will calculate the following: average percent change over time
for Days 1 – 7 after the pattern completed.
Some of this data will probably be provided for free although the final analysis will be available for purchase in the Scribd store.
The candlestick techniques we use today originated in the style of technical charting used by the Japanese for over 100 years before the West
developed the bar and point-and-figure analysis systems. In the 1700s a Japanese man named Homma, a trader in the futures market,
discovered that, although there was a link between price and the supply and demand of rice, the markets were strongly influenced by the
emotions of the traders. He understood that when emotions played into the equation a vast difference between the value and the price of rice
occurred. This difference between the value and the price is as applicable to stocks today as it was to rice in Japan centuries ago. The principles
established by Homma are the basis for the candlestick chart analysis, which is used to measure market emotions towards a stock.
Shooting Star (Single day)
Dark Cloud Cover Pattern (Multiple days)
A type of candlestick formation that results when a
security's price, at some point during the day, advances
well above the opening price but closes lower than the
In candlestick charting, a pattern where a black candlestick follows
a long white candlestick. It can be