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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 Above The Stomach

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 12/11/2017
24,386 56.87 0.2%
10,371 -31.68 -0.3%
763 4.90 0.6%
6,875 35.00 0.5%
2,660 8.49 0.3%
YTD
23.4%
14.7%
15.6%
27.7%
18.8%
Tom's Targets    Overview: 11/30/2017
24,600 or 23,500 by 12/15/2017
9,900 or 10,500 by 12/15/2017
800 or 750 by 12/15/2017
7,100 or 6,700 by 12/15/2017
2,725 or 2,575 by 12/15/2017

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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Above the stomach is a simple candlestick pattern and yet it works very well, functioning as a bullish reversal 66% of the time. You can also spot it often because it has a frequency rank of 32 out of 103 candle patterns, where 1 is most often.

Details about the pattern are sketchy, though. According to one website I checked, the candle is a two line pattern that appears in a downward price trend. The first candle is black and the second is white with a body at or above the midpoint of the prior candle’s body.

Important Results for Above The Stomach

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 66% of the time
Frequency rank: 32
Overall performance rank: 31
Best percentage meeting price target: 61% (bull market, up breakout)
Best average move in 10 days: -4.86% (bear market, down breakout)
Best 10-day performance rank: 33 (bear market, down 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 above the stomach candlestick
Above The Stomach
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Above The Stomach Discussion

The above the stomach candle is an easy one to find. Look for two candles in a downward price trend. The first one is black and the second is white. The body of the second should be at or above the middle of the first candle’s body. In other words, the opening and closing prices of the second day must be above the mid point of the first candle’s body.

The candle represents a bullish reversal both in theory and reality, according to my testing. The above the stomach pattern reverses the downtrend 66% of the time, which is a good score. The overall performance rank is 31, which is far from 1, but is nevertheless a decent showing.

The above the stomach candle exhibits its best performance 10 days after the breakout by dropping an average of 4.86% in a bear market, ranking 33rd out of 103 candlestick patterns, where 1 is best.

Above The Stomach Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternDownward.
ConfigurationLook for two candles in a downward price trend. The first candle is black and the second white. The white candle should open and close at or above the mid point of the black candle’s body.

Three Trading Tidbits for Above The Stomach

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. Above the stomach candles that appear within a third of the yearly low perform best -- page 92.
  2. Above the stomach candles within a third of the yearly high frequently act as reversals -- page 95.
  3. Above the stomach works best as part of a downward retracement in an upward price trend -- page 93.
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Above The Stomach Example

The above the stomach candlestick on the daily scale

The above the stomach candlestick pattern appears on the daily scale and it is circled in red. The candle appears in a downward price trend with the first candle being black followed by a white one. The white candle has a body that is above the mid point of the body of the black candle, and this one acts as a temporary reversal of the downward price trend.

I say temporary reversal because when price rejoins the downward price trend, it cannot fight the current for long. The upward move falters and then price begins sliding, pulled down by a downward price trend already established. For this reason, that is why I recommend trading this candle as part of a downward retrace in an upward price trend. When price exits from the candle pattern, it rejoins the upward trend and off you go.

-- Thomas Bulkowski

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See Also

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. If at first you don’t succeed, call it version 1.0!