Candlestick Patterns
The Evidence Behind 26 Famous Patterns — Precisely Defined and Tested Against Three Million Trading Days
The hammer is the most famous bullish candle in trading. After a hammer, price was higher less often than after an ordinary day.
Most candlestick books teach by example. This one counts every occurrence.
That result comes from testing 26 well-known candlestick patterns against every company in the S&P 500, counted only on the days it was actually in the index, from January 2002 to September 2026. That is 1,012 companies and more than three million trading days, with every pattern counted and reported the same way.
Six of the 26 show a difference that held up. Three point the way they are taught. The other three point the opposite way, and they are among the best-known patterns in the subject.
The testing is built to avoid the usual traps. Each pattern is compared with days that had already moved just as far, since many patterns can only appear after a big move; seven that look like signals turn out to be price moves wearing a name. The bar for a real finding was set before the results came in and raised to allow for luck across 26 tests. Companies later dropped from the index are counted for every day they were in it. And the failures are printed in full, along with the exact rules and method, so you can check every number.
This is not a trading system, and it won't tell you when to buy or sell. It tells you what these 26 patterns have actually done, so you can decide what they deserve in your own trading.
Inside the book
- A precise rule for every pattern, exact enough to say yes or no on any chart
- What each candle actually records, and where reading stops and storytelling begins
- How often price was higher one, three, five, and ten days after each of the 26, compared with an ordinary day
- Which famous patterns point the wrong way
- Six questions to ask of any trading claim, including the claims in this book
- Two reference cards to keep beside your screen
More than 80 figures, a glossary, and an A to Z pattern index. Patterns include the hammer, hanging man, inverted hammer, and shooting star; the doji family; the spinning top and marubozu; engulfing and harami patterns; dark cloud cover and the piercing line; tweezer tops and bottoms; the morning and evening stars; three white soldiers and three black crows; and more.
Look inside
A few pages from the paperback. Select a page to see it full size.
- The contents
- The opening of Chapter 1
- Figure 8.3: hammer against hanging man, tested
- Figure 14.1: three million days narrowed to 1,832
Who it's for
Anyone who uses candlestick patterns, including complete beginners. It's written for readers who have never looked closely at a candle.
