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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's 12 New Price Lines

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Market
Industrials (^DJI):
Transports (^DJT):
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Nasdaq (^IXIC):
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As of 02/27/2017
20,837 15.68 0.1%
9,474 52.57 0.6%
696 -3.49 -0.5%
5,862 16.59 0.3%
2,370 2.39 0.1%
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21,150 or 20,000 by 03/15/2017
8,800 or 9,700 by 03/01/2017
700 or 640 by 03/01/2017
5,950 or 5,650 by 03/01/2017
2,400 or 2,260 by 03/01/2017
Indus strength: None YTD
Mutt Losers: None YTD
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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The 12 new price lines candle pattern is as it sounds: twelve candle lines in a row, each with a high higher than the previous one. It is supposed to act as a bearish reversal, but testing reveals that it acts as a bullish continuation pattern 51% of the time. That is about random.

Overall performance ranks 99th out of 103 candle patterns and that isn't good. It suggests a short price trend after the breakout.

12 New Price Lines Important Results

Theoretical performance: Bearish reversal
Tested performance: Bullish continuation 51% of the time
Frequency rank: 87
Overall performance rank: 99
Best percentage meeting price target: 85% (bear market, down breakout)
Best average move in 10 days: 2.07% (bull market, up breakout)
Best 10-day performance rank: 80 (bear market, up breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal 12 new price lines candlestick
12 New Price Lines
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12 New Price Lines Discussion

The 12 new price lines act as a bullish continuation of the existing price trend 51% of the time, but candle theory says it should act as a bearish reversal. Since random performance is 50%, the 12 new price lines comes close. What’s worse, though, is the overall performance rank: 99 where 1 is best out of 103 candle patterns.

With the new lines candles, 8, 10, 12, and 13, I determine the breakout direction using the last candle line in the pattern. A close above the top or a close below the bottom of it would constitute an up or down breakout, respectively. The measure rule (percentage meeting price target) is based on taking the height of the move from the first to last candle in the pattern and dividing by 6 for upward breakouts or 3 for downward breakouts. The reason for this is because the pattern can be quite tall and using the full height would set an almost impossible target.

Price meets the target after a downward breakout in a bear market 85% of the time. The best average move 10 days after a breakout is a rise of just 2.07% in a bull market. A good move would be a rise of 6% or more, so this falls short.

12 New Price Lines Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwelve.
Price trend leading to the patternNone required.
ConfigurationLook for twelve consecutive candle lines, each with a higher high.

Three Trading Tidbits for 12 New Price Lines

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. 12 new price lines candles that appear within a third of the yearly low perform best for upward breakouts -- page 51.
  2. 12 new price lines break out upward most often, especially in a bear market -- page 55-56.
  3. Volume gives performance clues -- page 54.
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The 12 new price lines candlestick on the daily scale

12 New Price Lines Example

The chart shows the 12 new price lines candlestick pattern on the daily scale, points 1 through 12. Since price continues higher, it also shows 13 new price lines candlestick as well as the 8 and 10 line variety. Notice how none of them act as reversal patterns either. Price just keeps moving up until day 15. After that, price drops, but only for a few days before the uptrend continues.

Based on this chart, and many others like it, to say that price will reverse after 8, 10, 12 or 13 days of higher highs is just guessing. If that were the case, then there would be no 13 new price lines candle pattern.

-- Thomas Bulkowski

 

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Madness takes its toll. Please have exact change.