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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 white candlestick is just another candle line, unremarkable in many respects. It acts as a continuation 51% of the time, which I consider random, and yet it appears often. The
frequency rank is 4 out of 103 candles, where 1 is most frequent. The move over 10 days is well down the list, ranking 68, so the white candle does not lead to powerful moves.
Important Results
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Theoretical performance: Reversal or continuation (indecision)
Tested performance: Continuation 51% of the time
Frequency rank: 4
Overall performance rank: 68
Best percentage meeting price target: 81% (bull market, up breakout)
Best average move in 10 days: -4.82% (bear market, down breakout)
Best 10-day performance rank: 35 (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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 White Candle
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Discussion
As I mentioned in the introduction, the white candle acts randomly, tending toward a continuation just 51% of the time. It occurs often, ranking fourth out of 103 candles but the
overall performance rank is worse than mid list: 68.
The white candle meets the measure rule target 81% of the time (which is the candle height added to the top or subtracted from the bottom of the candle, depending on the breakout
direction). The best move occurs in a bear market after a downward breakout. The average decline over the 10 days after the breakout is 4.82%, placing it 35 where 1 is best. That is not
a bad rank, but the best performing candle patterns show declines averaging over 6%.
Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | One. |
| Price trend leading to the pattern | None required. |
| Configuration | An average height candle with a white body and shadows shorter than the body. |
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.
- White candles that appear within a third of the yearly low perform best -- page 173.
- White candles with tall shadows (taller than the median height) outperform -- page 174.
- White candles with breakouts below the 50-trading day moving average tend to perform best -- page 175.
Example
The daily chart of FDX shows two white candles, one at A and the other at, you guessed it, B.
They are of average size, white, with upper and lower shadows shorter than the body.
White candle A occurs in a downtrend just two days before the bottom. Candle B occurs in an uptrend
after a series of spinning tops highlighted indecision after a strong move up. Price gaps higher after the white candle, suggesting renewed enthusiasm for the stock, but that
is short-lived. Price collapses in early April, finding support at the top of the white candle.
-- Thomas Bulkowski
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