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Written and copyright © 2008-2011 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 breakaway is indeed bullish, unlike some other candlesticks with the bullish moniker. Unfortunately, it acts as a reversal just 59% of the time, which I consider "near random."
The candle pattern is also rare. The overall performance is 45 out of 103 candlesticks where 1 is the best performing, so do not expect a long trend after this candle breaks out.
Important Results for Bullish Breakaway
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Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 59% of the time
Frequency rank: 97
Overall performance rank: 45
Best percentage meeting price target: 75% (bear market, down breakout)
Best average move in 10 days: -5.79% (bear market, down breakout)
Best 10-day performance rank: 12 (bear market, up 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.
The above numbers are based on hundreds of perfect trades. See the glossary for definitions.
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 Bullish Breakaway
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Bullish Breakaway Discussion
The bullish breakaway candle is a rare pattern, rare enough that I did not provide performance statistics in my Encyclopedia of candlestick charts book.
As with many multi-line candle patterns, the identification guidelines are stringent, eliminating many that might otherwise qualify. Of course, beauty is in the eye of the beholder
(or beer holder), so it is ultimately up to you to decide what qualifies as a bullish breakaway.
The bullish breakaway candlestick acts as a bullish reversal both in theory and in the 41 I found. The overall performance rank is 45, which is mid list. The best average move
10 days after the breakout is a drop of 5.79% in a bear market. I consider moves of 6% or more as good, so I think this pattern performs well, too. However, additional samples might change
that assessment. The best 10-day performance rank is 12, which is very good considering 1 is best out of 103 candle patterns.
Bullish Breakaway Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | Five. |
| Price trend leading to the pattern | Downward. |
| Configuration | Look for a series of five candles in a downtrend. The first candle is tall and black followed by another black one that opens lower, leaving a gap between
the two bodies (but shadows can overlap). The third day is a candle of any color but it should have a lower close. Day four is a black candle with a lower close. The final day is a
tall white candle that closes within the body gap of the first two candles. |
Bullish Breakaway Example
The chart shows a bullish breakaway candlestick on the daily scale. I would like to say that it is a good example, but with a candle pattern as rare as this one, you take any
that come along.
Circled in red is a tall black candle that begins the bullish breakaway. Price gaps lower the next day after another black candle appears. Note
the gap between the two bodies. Days three and four are candles with lower closes, wrapped up with a white candle that closes within the gap between the bodies of the first two candles.
This candle pattern appears in a downward price trend and it acts as a bullish reversal when price closes above the top of the 5-candle pattern. A downward breakout would be a close
below the lowest low in the pattern. Exciting isn't it?
-- Thomas Bulkowski
Copyright © 2008-2011 by Thomas N. Bulkowski. All rights reserved. Double your drive space. Delete Windows.
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