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Written and copyright © 2008-2010 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 southern doji is supposed to act as a bullish reversal candlestick, and it does, but just 52% of the time. I call that "near random." If you found one charging at you while on
safari, you would not know which way to turn. Most doji candlesticks that I have studied are just like that: They act randomly.
Important Results
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Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 52% of the time
Frequency rank: 8
Overall performance rank: 78
Best percentage meeting price target: 90% (bull market, up breakout)
Best average move in 10 days: 3.51% (bear market, up breakout)
Best 10-day performance rank: 50 (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.
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 Southern Doji
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Discussion
Theory matches the performance found in the field: the southern doji acts as a bullish reversal but only 52% of the time. Based on the frequency rank (8), you will find it often in a historical
price trend, but performance after the breakout ranks well down the list of performers: 78. Since I only looked at 103 candlesticks, with 1 being best, the southern doji is not one worth
hunting for.
After the breakout, price meets the measure rule target 90% of the time. That means if you add the height to the top of the doji, price will
reach it 90% of the time before the trend ends. That is a good score but it only applies to upward breakouts in a bear market. The best average rise is 3.51% over 10 days which I consider
poor. Rises of 6% or more get me hot!
Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | One. |
| Price trend leading to the pattern | Downward. |
| Configuration | Look for a doji candlestick (one in which the opening and closing prices are a few pennies from each other) in a downward price trend. |
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.
- Southern doji candles that appear within a third of the yearly low perform best -- page 260.
- Southern doji candles with shadows taller than the median outperform -- page 261.
- Southern doji within a third of the yearly high tend to act as reversals -- page 262.
Example
Shown is a southern doji (A) on the daily chart. This doji has the opening and closing prices the same and it appears in a downward price trend -- all
the ingredients to qualify it as a southern doji. Price reverses trend when it breaks out upward (a close above the top of the doji).
-- Thomas Bulkowski
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