Subscribe to RSS feeds Bulkowski Blog via RSS

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

Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral.

Picture of the Tears for Bumper.
Kindle
Picture of the head's law.
Kindle
Paperback
Nook
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.

Bulkowski’s Advance Block

Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/28/2017
20,941 -40.82 -0.2%
9,098 -96.36 -1.0%
704 -3.23 -0.5%
6,048 -1.33 0.0%
2,384 -4.57 -0.2%
YTD
6.0%
0.6%
6.8%
12.3%
6.5%
Tom's Targets    Overview: 04/17/2017
20,100 or 21,150 by 05/01/2017
8,500 or 9,500 by 05/01/2017
725 or 685 by 05/01/2017
6,150 or 5,900 by 05/15/2017
2,275 or 2,425 by 05/01/2017
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.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

$ $ $

Advance Block Overview

The advance block candle is one that I like, but I am not sure why. It is supposed to act as a bearish reversal, but testing shows it is really a bullish continuation pattern. The reversal is just above the "near random" range of 51% to 59%, where so many candle patterns seem to reside. With a frequency rank of 65 out of 103 candles, it is not a popular rock star, either. The post breakout trend is also mid list. I am losing my enthusiasm for this candle pattern...

Important Advance Block Results

Theoretical performance: Bearish reversal
Tested performance: Bullish continuation 64% of the time
Frequency rank: 65
Overall performance rank: 54
Best percentage meeting price target: 53% (bull market, up breakout)
Best average move in 10 days: -4.76% (bear market, down breakout)
Best 10-day performance rank: 32 (bull 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 advance block candlestick
Advance Block
Top of page   More

Advance Block Discussion

As I mentioned in the introduction, the advance block is supposed to act as a bearish reversal, but doesn't. In fact, it acts as a bullish continuation pattern 64% of the time. The overall performance rank is 54, which is mid list out of 103 candles.

The best move 10 days after the breakout is an average drop of 4.76% in a bear market. I consider moves of 6% or higher to be good, so this one falls well short of that. However, the best performance rank is 32, which is respectable. You will find that the best performance comes from advance block candles with downward breakouts.

Identification Guidelines

CharacteristicDiscussion
Number of candle linesThree.
Price trend leading to the patternUpward.
ConfigurationLook for three white candles in an upward price trend. On each candle, price opens within the body of the previous candle. The height of the shadows grow taller on the last two candles.
Top of page   More

Three Trading Tidbits for Advance Block

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. For advance blocks that signal a reversal, look for them in an upward retracement of a downward price trend -- page 103.
  2. Select tall candles for the best performance -- page 101.
  3. The advance block breaks out upward most often -- page 105.

Advance Block Example

The advance block candlestick on the daily scale

I consider this chart a wimpy example of an advance block candlestick pattern. In an upward price trend, price forms a tall white candle followed by two smaller bodied white candles (the tall candle is not a requirement, but an observation in this example). Each of the last two candles has taller upper shadows when compared to their body height.

The candle pattern shows the progression from bullish enthusiasm to bearish warning. On the last two candle lines, bulls push price higher only to be beaten back down by the bears. But that does not stop the bulls because a few days later, price stages an upward breakout by closing above the top of the pattern.

Since price trends upward leading to the advance block and breaks out upward, this is an example of a continuation pattern. That is not how theory says the candle works, but you will find it behaving as a continuation almost two-thirds of the time.

-- Thomas Bulkowski

Top of page   More  

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. A conclusion is simply the place where you got tired of thinking.