Candlestick patterns
We ran billions of data points on candlestick patterns and kept only the setups that beat the market's normal baseline. Three came out on top, and each one is a candle you already know plus one condition that does most of the work.
Candlestick patterns
In the worst stretch of 2008, SPY printed a gap-up harami on Christmas Eve, a quiet hammer on Boxing Day and another quiet hammer the Monday after. Each one finished the next five trading days more than 6% higher.
Candlestick patterns
The gap-up harami is the candlestick setup you'll meet most often, and it's decided at the very first print of the day. With the gap it averaged +1.07% over the next five days on SPY since 2005 and QQQ since 2011. Without it, 0.13%.
Candlestick patterns
The inverted hammer records a rally that fell apart before the close. After a down week, on a busy day, it finished higher five trading days later 77.1% of the time on SPY since 2005 and QQQ since 2011.
Candlestick patterns
A hammer after a down week, on a slow day, finished higher five trading days later 71.9% of the time on SPY since 2005 and QQQ since 2011. The same shape on a busy day averaged almost nothing.