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CANDLE STICK PATTERN

STATISTICS

BASED ON SITUATIONAL METRICS USING

TECHNICAL INDICATORS

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ANALYZED FOR THE CRYPTO MARKET

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Candlestick patterns are ubiquitous in crypto trading and are unavoidable. We see them on charts and know whether they are bullish or bearish. Yet, we don’t know their true efficacy and must take them at face value because we haven’t tested them ourselves.

A quick google search will show you articles that claim which patterns are “the best” or “the most powerful” without any data to back those claims. Even if those claims were true, compared to the analysis done by Candlenomics, they do not perform well in the crypto market. In fact, the candlestick patterns in those articles tend to do the opposite of what they claim in crypto.

So, we can either incorporate them into our trades and hope for the best, or we can ignore them and trade without giving them another thought. In either case, given how often candlestick patterns appear, it would be prudent to have statistical data showing how they affect price. Just look at how many candlestick patterns there are on the charts below. With the candlestick pattern statistics from Candlenomics, each candlestick pattern is a potential opportunity to capitalize on.

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Because candlesticks are the foundation upon which technical analysis and trades are built, it would be advantageous to have statistical data for candlestick patterns as they are part of that foundation. So, whether you’re a swing trader or a day trader, and regardless of your trading system or style, our candlestick pattern statistics could provide a boost to your number of winning trades by adding a statistical edge to your trading arsenal.

26 candlestick patterns were analyzed on the daily time frame specifically for the crypto market. They were analyzed in conjunction with commonly used technical indicators to gain more insight into their effectiveness. A total of 865 data sheets and graphs comprise the statistics data.

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CANDLESTICK PATTERNS

These are the 26 candlestick patterns analyzed for the crypto market.

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SITUATIONAL INDICATOR METRICS

5 types of indicators were used to help identify market conditions in which patterns occurred and after a pattern occurred. By utilizing indicators, we can gain better insight by analyzing candlestick patterns based on measurable situations. 

  1. 50 Moving Average (MA) - used to define the trend

  2. Chaikin Money Flow (CMF) - a volume indicator to identify buying and selling pressure

  3. Stochastic RSI (sRSI) - an oscillating indicator to identify over extended price conditions

  4. Bollinger Bands (BB) - used to identify price within a highs and lows frame of reference

  5. Average True Range (ATR) - measures the volatility of price

BULLISH REVERSAL PATTERN

SITUATIONAL METRICS

  1. All pattern occurrences regardless of indicators

  2. Below 50 MA

  3. Below 50 MA and CMF is positive

  4. Below 50 MA and CMF is negative

  5. Below 50 MA and sRSI is greater than 80

  6. Below 50 MA and sRSI is less than 20

  7. Below 50 MA and high is above upper BB

  8. Below 50 MA and low is below lower BB

BEARISH REVERSAL PATTERN

SITUATIONAL METRICS

  1. All pattern occurrences regardless of indicators

  2. Above 50 MA

  3. Above 50 MA and CMF is positive

  4. Above 50 MA and CMF is negative

  5. Above 50 MA and sRSI is greater than 80

  6. Above 50 MA and sRSI is less than 20

  7. Above 50 MA and high is above upper BB

  8. Above 50 MA and low is below lower BB

 

BULLISH REVERSAL PATTERN SITUATIONAL METRICS

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BEARISH REVERSAL PATTERN SITUATIONAL METRICS

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SITUATIONAL OCCURRENCES

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ANALYSIS

Candlestick patterns were analyzed based on the price movement of the subsequent candles. The aim was to understand how price moved, how much it moved, and how strong it moved by measuring market sentiment, price action, volatility, strength, trend, and momentum. Below are the 27 metrics used to analyze those subsequent candles. Note: trigger candle is the last candle in a pattern.

  1. Average occurrence of an up candle - shows how often the candle closed upwards (market sentiment),

  2. Average occurrence of a down candle - shows how often the candle closed downwards (market sentiment).

  3. Average occurrence of the ATR (20) HIT? - compares the candles price range to the previous 20 days by whether price moved at least the same amount as the average true range of the previous 20 days in dollar value (volatility).

  4. Average occurrence of high above trigger high - shows how often price is above the trigger high (price action).

  5. Average occurrence of high below trigger high - shows how often price is below the trigger high (price action).

  6. Average occurrence of close above trigger high - shows how often price closes above the trigger high (price action).

  7. Average occurrence of close below trigger high - shows how often price closes below the trigger high (price action).

  8. Average occurrence of low above trigger low - shows how often price is above the trigger low (price action).

  9. Average occurrence of low below trigger low - shows how often price is below the trigger low (price action).

  10. Average occurrence of close above trigger low - shows how often price closes above the trigger low (price action).

  11. Average occurrence of close below trigger low - shows how often price closes below the trigger low (price action).

  12. Average change % - shows the price change in percentage (strength).

  13. Median change % - shows the median price change in percentage (strength).

  14. Average range % - shows the average price range in percentage (volatility).

  15. Median range % - shows the median price range in percentage (volatility).

  16. Average high from trigger high % - shows the candles average high in relation to the trigger high (trend and momentum).

  17. Median high from trigger high % - shows the candles median high in relation to the trigger high (trend and momentum).

  18. Average low from trigger high % - shows the candles average low in relation to the trigger high (trend and momentum).

  19. Median low from trigger high % - shows the candles median low in relation to the trigger high (trend and momentum).

  20. Average close from trigger high % - shows the candles average close in relation to the trigger high (trend and momentum).

  21. Median close from trigger high % - shows the candles median close in relation to the trigger high (trend and momentum).

  22. Average high from trigger low % - shows the candles average high in relation to the trigger low (trend and momentum).

  23. Median high from trigger low % - shows the candles median high in relation to the trigger low (trend and momentum).

  24. Average low from trigger low % - shows the candles average low in relation to the trigger low (trend and momentum).

  25. Median low from trigger low % - shows the candles median low in relation to the trigger low (trend and momentum).

  26. Average close from trigger low % - shows the candles average close in relation to the trigger low (trend and momentum).

  27. Median close from trigger low % - shows the candles median close in relation to the trigger low (trend and momentum).

NOTE: Candle stick patterns are effective for shorter term price movements, typically up to 10 candles, and focus should be on those 10 candles when referencing the statistics. The 10 additional candles that were analyzed should be viewed for general trend and momentum purposes only.

Trigger candle example

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Statistics data sheet and graph example

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Statistics based off CRYPTO MAJORS: BTCUSD (Coinbase), BTCUSD (Bittrex), BTCUSD (Bitstamp), BTCUSDT (Binance), ETHUSD (Coinbase), ETHUSDT (Bittrex), ETHUSD (Bitstamp), ETHUSDT (Binance), LTCUSD (Coinbase), LTCUSDT (Bittrex), LTCUSD (Bitstamp), LTCUSDT (Binance), XRPUSD (Coinbase), XRPUSDT (Bittrex), XRPUSD (Bitstamp), XRPUSDT (Binance). ALL PAIR and ALL EXCHANGE are in reference to the aforementioned.