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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 bullish belt hold is one of the better performing candlesticks that I researched. It acts as a bullish reversal often, placing its rank at 11 out of 103 (where 1 is best) and it occurs
frequently in nature (ranking 22). Overall performance is well back of the pack, though: 62. That is because the return over 10 days is lousy when compared to other candle patterns.
Important Results
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Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 71% of the time
Frequency rank: 22
Overall performance rank: 62
Best percentage meeting price target: 74% (bull market, up breakout)
Best average move in 10 days: -5.2% (bear market, down breakout)
Best 10-day performance rank: 28 (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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 Bullish Belt Hold
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Discussion
As the important results show (see above), the candle functions well as a bullish reversal in practice as well as in theory. The frequency rank is 22, meaning the candle occurs often,
so it is easy to find in a historical price series. The overall performance is mid list, 62, and that is because of the comparatively poor performance over the 10 day measurement period.
The post breakout trend in a bull market after an upward breakout results in the best percentage meeting the price target (which is the candle height projected upward or downward,
depending on the breakout direction). The average move 10 days after the breakout is not exceptional at -5.2%, meaning price drops. The best performance over the 10-day
measurement period occurs in a bear market after a downward breakout. The candle ranks 28 out of 103 candles, where 1 is best.
Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | One. |
| Price trend leading to the pattern | Downward. |
| Configuration | Look for a white candle with no lower shadow, but closing near the 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.
- Bullish belt hold candles that appear within a third of the yearly low perform best -- page 130.
- Belt hold candles taller than the median have post breakout performance significantly better than those shorter than the median -- page 131.
- Belt holds with comparatively tall upper shadows outperform -- page 131.
Example
The chart shows three bullish belt hold candlesticks on the daily scale. Candle A has a small upper shadow and the candle acts as a
reversal of the uptrend but fails. Since price closes below the belt hold’s low, the breakout is downward, resuming the downtrend already underway.
Candle B also acts as a continuation because price enters the candle from below and exits out the top, resuming the uptrend that began on
the prior candle.
Belt hold C appears just after a minor low, but this bullish belt hold acts as a reversal. The candles leading to C
show price falling. At C, the stock begins posting higher closes, moving price up. The down to up movement surrounding the bullish
belt hold qualifies this belt hold as a reversal.
The difference between belt hold A and C is that C has an upward
breakout but A breaks out downward. Both have price trends leading downward into the candle.
-- by Thomas Bulkowski
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