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Written and copyright © 2008-2009 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.
The 10 new price lines candle pattern is as it sounds: ten candle lines in a row, each with a high higher than the previous one. It is supposed to act as a bearish reversal and it does, but
only 51% of the time in a bull market. That is about random. In a bear market, it acts as a continuation pattern, too.
Overall performance ranks 100th out of 103 candle patterns and that isn’t good. It suggests the trend after the breakout is short lived.
Important Results
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Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 51% of the time
Frequency rank: 69
Overall performance rank: 100
Best percentage meeting price target: 93% (bear market, down breakout)
Best average move in 10 days: -1.95% (bear market, down breakout)
Best 10-day performance rank: 83 (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.
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 10 New Price Lines
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Discussion
The 10 new price lines act as a bearish reversal both in theory and reality but just barely. Price reverses just 51% of the time. That is really random because you will not be able
to say with any certainty that price will reverse. What’s worse, is the overall performance rank: 100 where 103 is worst and 1 is best. Yuck.
With the new lines candles, 8, 10, 12 and 13, I determine the breakout direction using the last candle line in the pattern. A close above the top or a close below the bottom of it would
constitute an up or down breakout, respectively. The measure rule (percentage meeting price target) is based on taking the height of the move from the first to last candle in the pattern
and dividing by 6 for upward breakouts or 3 for downward breakouts. The reason for this is because the pattern can be quite tall and using the full height would set an almost impossible
target.
Price meets the target after a downward breakout in a bull market 93% of the time. The best average move 10 days after
a breakout is a drop of just 1.95% in a bear market. A good move would be a drop of 6% or more, so this falls short. The ranking of the decline is 83, well behind the first place rank of 1.
Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | Ten. |
| Price trend leading to the pattern | None required. |
| Configuration | Look for ten consecutive candle lines, each with a higher high. |
Three Trading Tidbits
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.
- 10 new price lines candles that appear within a third of the yearly low perform best for upward breakouts -- page 40.
- 10 new price lines acting as reversals occur most often within a third of the yearly low -- page 44.
- Volume gives performance clues -- page 42.
Example
The chart shows the 10 new price lines candlestick pattern on the daily scale, points 1 through 10.
Since price continues higher, it also shows 12 and 13 new price lines candlesticks as well as the
8 line variety. Notice
how none of them act as reversal patterns either. Price just keeps moving up until day 15. After that, price drops, but only for a few days before the uptrend continues.
Based on this chart, and many others like it, to say that price will reverse after 8, 10, 12 or 13
days of higher highs is just guessing. If that were the case, then there would be
no 12 or 13 new price lines candle patterns.
-- Thomas Bulkowski
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