A researcher named Fock, together with some colleagues, throws water on a financial investment practice called “candlestick analysis”:
“Performance of Candlestick Analysis on Intraday Futures Data,” J. Henning Fock, et. al., Journal of Derivatives, Fall 2005, Vol. 13, No. 1: pp. 28-40. The authors write:
“Many practitioners use technical trading in derivatives markets, especially futures. Academic researchers, by contrast, consider “charting” to be without merit… Fock, Klein, and Zwergel put one very popular charting technique, the “candlestick” method, to the test. They start by developing specific criteria for a set of basic candlestick patterns, and then measure predictive performance with intraday data from two major futures, the DAX stock index contract, and the Bund interest rate future. And guess what? The academics are right! The authors find no evidence of predictive ability from candlestick patterns alone, or in combination with other common technical indicators, like momentum.”
BONUS: A web site called The Swing Trading Guide gives these examples of candlestick patterns:
