Written and copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved.
In my book,
Encyclopedia of Candlestick Charts, pictured on the right,
I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines
in the tests.
The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines,
performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators),
and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy
by clicking on the above link.
I expected the long white day candlestick to behave randomly, but it suggests a continuation of the existing price trend 58% of the time. It appears frequently in a historical price series,
so you will be able to find it often. Performance is mid list, though, ranking 53 where 1 is best out of 103 candle patterns.
Long White Day Important Results
Theoretical performance: Continuation
Tested performance: Continuation 58% of the time
Frequency rank: 10
Overall performance rank: 53
Best percentage meeting price target: 60% (bear market, down breakout)
Best average move in 10 days: -6.21% (bear market, down breakout)
Best 10-day performance rank: 16 (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.
Long White Day
Long White Day Discussion
As I mentioned in the introduction, the long white day candlestick acts as a continuation 58% of the time but it appears frequently, ranking 10th. Overall performance is well down the list
from 1. It ranks 53.
Since the candle is a tall one, it only reaches the measure rule price target 60% of the time. That is when you take the height of the candle pattern and add it to the price of the
top of the candle or subtract it from the bottom to get a target, depending on the breakout direction.
The best average move occurs after a downward breakout in a bear market. Price
drops 6.21% ten days after the breakout. That is a nice move. That also places the 10 day performance rank at 16, which is also quite good.
Long White Day Identification Guidelines
|Number of candle lines||One.|
|Price trend leading to the pattern||None required.|
|Configuration||Look for a tall white candle with shadows shorter than the body and a body at least three times taller than the average body height over the last 2 or 3 weeks.|
Three Trading Tidbits for Long White Day
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.
- Long white day candles that appear within a third of the yearly low perform best -- page 499.
- Long white days taller than the median show price that moves almost twice as far after the breakout as those shorter than the median -- page 499.
- Breakouts below the 50-trading day moving average tend to outperform -- page 501.
Long White Day Example
Candles A and B in the daily chart both appear in an upward price trend. In A,
price reverses direction the next day, but in B, price continues higher after a 1-day pause.
The first candle (A)
is a reversal because the inbound trend is upward and the breakout is downward. The B candle has upward inbound and outbound trends, so it is
a continuation candle.
Notice that the shadows are shorter than the body and that the body is taller than most recent candles.
-- Thomas Bulkowski
Copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved. Your kid may be an Honor Student, but you're still an idiot.