|
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 13 new price lines candle pattern is as it sounds: 13 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 57% of the time in a bull market. That is what I call "near random."
Overall performance ranks 95th out of 103 candle patterns and that isn’t good. It suggests a short price trend after the breakout.
Important Results
|
Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 57% of the time
Frequency rank: 90
Overall performance rank: 95
Best percentage meeting price target: 80% (bear market, down breakout)
Best average move in 10 days: -4.38% (bear market, down breakout)
Best 10-day performance rank: 42 (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.
|
 13 New Price Lines
|
Discussion
The 13 new price lines act as a bearish reversal of the existing price trend 57% of the time, which is close to random. The frequency rank is 90, so it is unlikely that you will find
this candle price pattern often. The overall performance rank is 95 which would be great if the best performance was 103, but it’s not. 103 is the worst rank and 1 is the best.
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 bear market 80% of the time. The best average move 10 days after
a breakout is a drop of 4.38% in a bear market. A good move would be 6% or more, so this falls a bit short. The performance over 10 days scores a rank of 42, or slightly better than mid list.
Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | Thirteen. |
| Price trend leading to the pattern | None required. |
| Configuration | Look for thirteen 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.
- 13 new price lines candles within a third of the yearly low act as reversals most often -- page 67.
- 13 new price lines break out upward most often in a bear market -- page 66.
- Volume gives performance clues -- page 65.
Example
The chart shows the 13 new price lines candlestick pattern on the daily scale, points 1 through 13.
It also shows 8, 10 and 12 new price lines candlesticks. Notice
how none of them act as reversal patterns. 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.
-- Thomas Bulkowski
|
. If you buy ANYTHING, they pay for the referral.
on 
