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 Ind
exes from 1988-2008. The data currently resides in a SQL Server database. Below is a screenshotof what it looks like in its raw form. These historical candlestick patterns are now being compared with one another in order to find those whichhave tended to be the most accurate with regard to future price movement. We will calculate the following:
average percent change over timefor 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.
he candlestick techniques we use today originated in the style of technical charting used by the Japanese for over 100 years before the Westdeveloped 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 theemotions of the traders. He understood that when emotions played into the equation a vast difference between the value and the price of riceoccurred. This difference between the value and the price is as applicable to stocks today as it was to rice in Japan centuries ago. The principlesestablished by Homma are the basis for the candlestick chart analysis, which is used to measure market emotions towards a stock.