As of 04/23/2024
Indus: 38,504 +263.71 +0.7%
Trans: 15,436 +212.01 +1.4%
Utils: 886 +2.63 +0.3%
Nasdaq: 15,697 +245.33 +1.6%
S&P 500: 5,071 +59.95 +1.2%
|
YTD
+2.2%
-2.9%
+0.5%
+4.6%
+6.3%
|
 39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 |
As of 04/23/2024
Indus: 38,504 +263.71 +0.7%
Trans: 15,436 +212.01 +1.4%
Utils: 886 +2.63 +0.3%
Nasdaq: 15,697 +245.33 +1.6%
S&P 500: 5,071 +59.95 +1.2%
|
YTD
+2.2%
-2.9%
+0.5%
+4.6%
+6.3%
| |
|
39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 | ||
In my book,
Encyclopedia of Candlestick Charts
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.
The last engulfing bottom candlestick is what those versed in western chart patterns would describe as an outside day if you ignore the shadows. The first candle is a white one followed by a black candle that engulfs or overlaps the prior body but not necessarily the shadows.
The last engulfing bottom is supposed to act as a bullish reversal but testing shows that it is a bearish continuation pattern 65% of the time. To me, that makes sense because the tall black candle is bearish and price is closer to the bottom of the candle pattern than the top. That makes a downward breakout more likely and since the last engulfing bottom is supposed to appear in a downward price trend, a downward breakout would be a continuation of that downtrend.
|
Theoretical performance: Bullish reversal
Tested performance: Bearish continuation 65% of the time
Frequency rank: 13
Overall performance rank: 48
Best percentage meeting price target: 70% (bull market, up breakout)
Best average move in 10 days: 4.85% (bear market, up breakout)
Best 10-day performance rank: 31 (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. |
 Last Engulfing Bottom
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The last engulfing bottom candle pattern acts as a bearish continuation pattern 65% of the time, ranking 14th where 1 is best out of 103 candle types. However, the overall performance rank is just mid list at 48. That suggests the post breakout trend is mediocre. A quick check of the statistics shows that performance is weakest after a downward breakout in a bull market. The drop is just -0.91% after 10 days. That lousy performance tends to yank the overall performance score lower.
The best average move 10 days after the breakout is a rise of 4.85% in a bear market, ranking 31st for performance. I consider good moves as 6% or higher, so this candle pattern does not make the grade. Since that is the best performance this candle pattern can muster, do not depend on a long or profitable price trend after the breakout.
| Characteristic | Discussion |
| Number of candle lines | Two. |
| Price trend leading to the pattern | Downward. |
| Configuration | Look for a white candle on the first day in a downward price trend followed by a black candle that engulfs the body of the white candle. That means the black candle has a body this is above the top and below the bottom of the white candle. Ignore the shadows. |
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.
Circled in red is a last engulfing bottom candlestick pattern. The two candles appear after a short-term downtrend of a few days in length. A white candle is the first in the two-line pattern followed by a black candle that is taller than the prior candle. The black candle's body is above the top of the prior candle and below the bottom of it as well. In other words, the black candle engulfs the body of the white candle.
As the chart shows, this last engulfing bottom does not act as a bullish reversal because price closes below the bottom of the candlestick pattern. A day later price reverses and starts moving up again. Had you bought into this last engulfing bottom expecting a reversal, you might have placed a stop below the bottom of the candle pattern, and then been cashed out the next day when price gapped open lower.
If we could look at the yearly price range and compare that to where the breakout from a last engulfing bottom resides, we would find that those in the lowest two thirds of the yearly price range function as continuation patterns most often. That leaves those within a third of the yearly high to work as reversals, but that is not the case. They also tend to be continuation patterns, just not at the rate of the other two-thirds of the yearly price range (that is, 58% continuations versus 69% to 72% for the other ranges)
-- Thomas Bulkowski
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