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No doubt that candlestick charts are the perfect way to visualize prices. These are ubiquitous, available in almost every software and online charting package(Nilson, 2004). Traders often claim to use various fancy and fuzzy name candlestick patterns in their market timing. And it is often backed by market psychology around candles. Surprisingly, the predictability of candlestick chart patterns is not as subject to debate as other technical indicators.

I understand that few experienced traders would say, you should combine candlestick patterns with other trend indicators and of course with volume. However, in my opinion, if a candlestick pattern adds some value, it would indicate bullish or bearish without combining with indicators too.

As the first step for the win trade probability is to analyze the past of candlesticks. In an attempt to do so I pick few stocks from SENSEX and used around 20 years daily data from Jan-1-2000 till Jan-1-2020. Lets first count the number of times a particular pattern emerged in the last twenty years. It would be helpful to see the frequency and return characteristics of these patterns. My hypothesis is, in general, a bullish pattern should give positive returns on the average basis and bearish patterns should give negative returns on an average basis.

Returns are calculate using close prices as:

Gravestone Doji

Ticker Num of Days Count Frequency of pattern Same day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 105 2.37% -0.09% -0.21% -0.10% -0.36% Axis Bank 4437 55 1.24% 0.32% 0.32% 0.31% 0.35% BAJAJ-AUTO 2865 35 1.22% 0.07% 0.59% 1.08% 0.86% Bajaj-Finance 4427 152 3.43% -0.24% -0.51% -0.32% -0.24% BHARTIARTL 4381 56 1.28% 0.03% -0.14% 0.14% 0.05% HCLTECH 4439 29 0.65% 0.05% 0.01% 0.42% -0.22% HDFC 4436 35 0.79% 0.03% 0.77% 0.64% 0.46% HDFCBANK 4437 31 0.70% 0.30% -0.18% -0.41% 0.55% HEROMOTOCO 4437 61 1.37% -0.05% 0.11% 0.10% 0.35% HINDUNILVR 4432 34 0.77% 0.06% -0.14% -0.23% -0.71% ICICIBANK 4430 36 0.81% 0.11% -0.02% -0.66% -0.49% INDUSINDBK 4438 67 1.51% 0.05% -0.15% 0.05% -0.42% INFY 4436 43 0.97% 0.17% -0.28% 0.28% 0.25% ITC 4432 39 0.88% 0.12% 0.02% -0.57% -0.96% KOTAKBANK 4437 72 1.62% 0.42% 0.42% 0.27% -0.01% LT 4413 65 1.47% 0.11% -0.15% -0.32% 0.11% MM 4438 40 0.90% -0.03% -0.35% -0.41% -0.33% MARUTI 4015 41 1.02% 0.15% 0.01% -0.03% 0.50% NESTLEIND 4429 95 2.14% -0.14% -0.20% -0.30% -0.08% ONGC 4438 56 1.26% 0.14% 0.29% -0.19% 0.00% POWERGRID 3022 35 1.16% 0.16% -0.13% 0.25% -0.04% RELIANCE 4430 47 1.06% 0.15% 0.31% 0.03% 0.84% SBIN 4433 54 1.22% 0.15% -0.25% -0.45% 0.44% SUNPHARMA 4426 72 1.63% -0.13% -0.21% -0.07% 0.68% TCS 3801 32 0.84% -0.08% -0.47% -0.78% -0.65% TATASTEEL 4430 44 0.99% 0.61% 0.57% 0.52% 0.67% TECHM 3299 62 1.88% -0.03% -0.25% 0.02% 0.66% TITAN 4433 56 1.26% 0.24% 0.53% 0.83% 1.02% ULTRACEMCO 3802 65 1.71% -0.18% -0.15% 0.25% -0.70%

Gravestone doji (which considered as bearish) doesn’t looks like bearish, although true to its name ‘doji’ confirm indecision. This bearish candle works conventionally bearish for TCS, however behaves opposite in case of TATA Steel. It doesn’t add much value, and it shouldn’t be reliable.

Dragonfly Doji

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 73 1.64% 0.58% 0.77% 1.07% 1.08% Axis Bank 4437 40 0.90% 0.55% 1.33% 1.60% 1.60% BAJAJ-AUTO 2865 18 0.63% 0.35% 0.69% 0.76% 0.68% Bajaj-Finance 4427 77 1.74% 0.29% 0.17% 0.36% 1.46% BHARTIARTL 4381 47 1.07% 0.53% 0.70% 0.12% 0.08% HCLTECH 4439 51 1.15% 0.16% 0.50% 0.63% 0.14% HDFC 4436 50 1.13% 0.36% 0.46% 0.17% 0.71% HDFCBANK 4437 44 0.99% 0.25% -0.01% 0.55% 1.03% HEROMOTOCO 4437 45 1.01% 0.16% 0.35% 0.38% 0.26% HINDUNILVR 4432 48 1.08% 0.22% 0.43% 0.42% 0.16% ICICIBANK 4430 30 0.68% 0.01% -0.10% 1.16% 1.10% INDUSINDBK 4438 38 0.86% 0.85% 1.00% 1.03% 0.97% INFY 4436 45 1.01% 0.25% 0.37% 0.10% -1.01% ITC 4432 38 0.86% 0.28% 1.00% 1.16% 1.18% KOTAKBANK 4437 31 0.70% 0.39% 0.08% 0.05% 0.36% LT 4413 35 0.79% 0.32% 0.47% 1.05% 0.88% MM 4438 35 0.79% 0.46% 0.28% 0.73% 1.15% MARUTI 4015 19 0.47% 0.32% 0.37% 0.64% 1.41% NESTLEIND 4429 64 1.45% 0.30% 0.51% 0.75% 0.48% ONGC 4438 34 0.77% 0.70% 0.22% -0.44% -0.29% POWERGRID 3022 33 1.09% 0.32% 0.27% 0.18% -0.92% RELIANCE 4430 32 0.72% 0.47% 0.85% 1.12% 0.82% SBIN 4433 22 0.50% 0.10% 0.81% 1.07% 0.46% SUNPHARMA 4426 42 0.95% 0.53% 0.62% 0.54% 0.04% TCS 3801 40 1.05% 0.20% 0.64% 1.05% 0.31% TATASTEEL 4430 27 0.61% 0.50% 0.26% 0.04% 0.45% TECHM 3299 14 0.42% 0.33% 0.28% 0.10% -1.75% TITAN 4433 26 0.59% 0.15% -0.28% -0.11% -1.46% ULTRACEMCO 3802 39 1.03% 0.46% 0.72% 0.81% 0.33%

For majority of stocks dragonfly appears around 1 % of times and next day returns are positive. Consistent with the wide spread view, it is bullish. It is a bit more reliable than gravestone doji.

Hammer

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 74 1.67% -0.45% -1.16% -1.26% -0.81% Axis Bank 4437 74 1.67% -0.78% -1.72% -1.48% -1.84% BAJAJ-AUTO 2865 33 1.15% -0.64% -1.13% -0.62% -0.26% Bajaj-Finance 4427 94 2.12% -0.79% -1.68% -1.89% -1.45% BHARTIARTL 4381 68 1.55% -0.92% -1.96% -1.83% -1.64% HCLTECH 4439 76 1.71% -0.74% -1.68% -1.46% -1.40% HDFC 4436 78 1.76% -0.59% -1.06% -0.81% -0.47% HDFCBANK 4437 87 1.96% -0.80% -1.44% -0.91% -0.90% HEROMOTOCO 4437 83 1.87% -0.67% -1.36% -0.99% -0.54% HINDUNILVR 4432 73 1.65% -0.51% -1.21% -1.15% -1.10% ICICIBANK 4430 99 2.23% -1.09% -1.58% -1.75% -1.64% INDUSINDBK 4438 65 1.46% -1.06% -2.15% -1.93% -0.94% INFY 4436 66 1.49% -0.66% -0.92% -0.61% -0.14% ITC 4432 63 1.42% -0.50% -1.26% -0.83% -0.61% KOTAKBANK 4437 73 1.65% -0.60% -1.34% -0.59% -0.39% LT 4413 50 1.13% -0.91% -1.50% -1.42% -1.90% MM 4438 71 1.60% -0.75% -1.76% -1.79% -1.32% MARUTI 4015 60 1.49% -0.79% -1.96% -2.20% -2.25% NESTLEIND 4429 71 1.60% -0.37% -0.51% -0.45% -0.60% ONGC 4438 64 1.44% -0.82% -1.71% -1.61% -0.70% POWERGRID 3022 34 1.13% -0.53% -1.20% -0.79% -0.54% RELIANCE 4430 50 1.13% -0.76% -1.61% -1.09% -0.13% SBIN 4433 65 1.47% -0.59% -1.37% -0.67% -0.73% SUNPHARMA 4426 55 1.24% -0.51% -1.22% -0.83% -0.93% TCS 3801 51 1.34% -0.52% -1.26% -1.31% -1.29% TATASTEEL 4430 60 1.35% -1.05% -1.89% -1.69% -2.03% TECHM 3299 33 1.00% -0.58% -1.45% -1.33% -1.71% TITAN 4433 60 1.35% -2.30% -3.41% -3.31% -4.95% ULTRACEMCO 3802 58 1.53% -0.77% -1.61% -1.45% -1.11%

Hammers appear around 1.5% of times. It is interesting to observe that hammer in general is more of a bearish contrary to widespread believe that it is a bottom reversal bullish pattern. However a separate study requires (link to be updated) that combines the hammer with overbought or oversold indicators.

Hanging man

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 97 2.19% 0.81% 1.39% 1.30% 1.51% Axis Bank 4437 42 0.95% 1.30% 3.12% 2.76% 3.31% BAJAJ-AUTO 2865 26 0.91% 1.02% 1.51% 1.57% 1.19% Bajaj-Finance 4427 75 1.69% 1.12% 1.48% 1.14% 2.37% BHARTIARTL 4381 56 1.28% 0.67% 1.72% 1.25% 0.67% HCLTECH 4439 60 1.35% 0.77% 1.99% 1.91% 1.14% HDFC 4436 66 1.49% 0.70% 1.95% 1.84% 1.95% HDFCBANK 4437 78 1.76% 0.69% 1.71% 1.94% 1.88% HEROMOTOCO 4437 46 1.04% 1.00% 2.20% 2.62% 1.65% HINDUNILVR 4432 55 1.24% 0.52% 1.63% 1.41% 1.24% ICICIBANK 4430 43 0.97% 0.85% 2.82% 2.25% 1.06% INDUSINDBK 4438 45 1.01% 1.92% 3.49% 4.02% 2.43% INFY 4436 39 0.88% 0.55% 1.50% 1.33% 1.07% ITC 4432 60 1.35% 0.54% 1.52% 1.75% 1.56% KOTAKBANK 4437 48 1.08% 0.78% 1.79% 1.45% 1.85% LT 4413 44 1.00% 1.08% 2.66% 2.35% 2.02% MM 4438 44 0.99% 1.07% 2.30% 1.76% 1.46% MARUTI 4015 25 0.62% 0.84% 2.06% 1.52% 1.57% NESTLEIND 4429 77 1.74% 0.84% 1.35% 1.82% 1.62% ONGC 4438 44 0.99% 1.06% 2.32% 1.83% 1.42% POWERGRID 3022 33 1.09% 0.75% 1.57% 1.52% 0.69% RELIANCE 4430 30 0.68% 0.86% 2.26% 2.36% 2.16% SBIN 4433 36 0.81% 0.63% 2.09% 1.81% 2.51% SUNPHARMA 4426 57 1.29% 0.90% 1.84% 1.81% 1.78% TCS 3801 46 1.21% 0.59% 1.83% 2.19% 1.79% TATASTEEL 4430 37 0.84% 1.34% 3.29% 3.16% 3.30% TECHM 3299 18 0.55% 1.29% 1.92% 1.86% -0.28% TITAN 4433 32 0.72% 0.69% 1.54% 1.24% -2.83% ULTRACEMCO 3802 38 1.00% 0.86% 1.76% 1.69% 1.30%

Again, contrary to technical analyst’s world believe system, hanging man seems more of a bullish instead of bearish reversal pattern. Other interesting observation is most of the return comes in next days. Weekly return actually declined from next day return. It is more reliable for the long position.

Bullish Engulfing

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 131 2.95% 1.77% 1.32% 1.36% 1.37% Axis Bank 4437 124 2.79% 2.22% 1.55% 1.66% 2.03% BAJAJ-AUTO 2865 98 3.42% 2.00% 1.18% 1.22% 1.37% Bajaj-Finance 4427 153 3.46% 2.75% 2.25% 2.48% 2.73% BHARTIARTL 4381 132 3.01% 2.53% 1.78% 1.88% 2.09% HCLTECH 4439 157 3.54% 2.18% 1.58% 1.69% 2.34% HDFC 4436 142 3.20% 2.40% 1.80% 1.90% 2.03% HDFCBANK 4437 159 3.58% 1.78% 1.13% 1.20% 1.46% HEROMOTOCO 4437 155 3.49% 2.00% 1.38% 1.27% 1.99% HINDUNILVR 4432 138 3.11% 1.69% 1.10% 1.30% 1.74% ICICIBANK 4430 134 3.02% 2.05% 1.45% 1.88% 2.05% INDUSINDBK 4438 114 2.57% 2.41% 1.78% 1.97% 2.53% INFY 4436 127 2.86% 1.81% 1.15% 1.26% 1.48% ITC 4432 103 2.32% 1.92% 1.50% 1.51% 1.63% KOTAKBANK 4437 147 3.31% 2.42% 1.86% 2.08% 2.50% LT 4413 136 3.08% 2.03% 1.26% 1.71% 2.65% MM 4438 120 2.70% 2.21% 1.59% 1.80% 2.16% MARUTI 4015 155 3.86% 2.23% 1.43% 1.46% 2.10% NESTLEIND 4429 145 3.27% 1.62% 1.28% 1.40% 1.63% ONGC 4438 133 3.00% 2.20% 1.50% 1.84% 1.67% POWERGRID 3022 108 3.57% 1.55% 1.06% 1.16% 1.04% RELIANCE 4430 162 3.66% 2.12% 1.20% 1.37% 1.68% SBIN 4433 125 2.82% 2.25% 1.55% 1.89% 1.95% SUNPHARMA 4426 131 2.96% 2.09% 1.41% 1.60% 1.36% TCS 3801 139 3.66% 1.75% 1.34% 1.47% 1.77% TATASTEEL 4430 99 2.23% 2.19% 1.48% 1.56% 2.66% TECHM 3299 112 3.39% 2.18% 1.62% 1.90% 2.59% TITAN 4433 115 2.59% 2.67% 1.71% 1.97% 3.11% ULTRACEMCO 3802 122 3.21% 2.32% 1.70% 1.56% 1.17%

Bullish engulfing pattern appears around 3% of the time and true to its name, it is bullish indeed. Next day returns on an average basis are around 1.5%. However returns stays the same or falls a bit from Next day to a week, which indicates that downtrend might has changed to sideways if not uptrend.

Bearish Engulfing

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 223 5.02% -1.45% -0.71% -0.55% -0.51% Axis Bank 4437 255 5.75% -2.10% -0.82% -0.43% -0.30% BAJAJ-AUTO 2865 163 5.69% -1.48% -0.78% -0.64% -0.50% Bajaj-Finance 4427 214 4.83% -1.93% -1.02% -0.63% -0.15% BHARTIARTL 4381 259 5.91% -2.18% -1.01% -0.93% -0.43% HCLTECH 4439 270 6.08% -2.05% -0.90% -0.61% -0.43% HDFC 4436 212 4.78% -1.77% -1.07% -0.93% -0.89% HDFCBANK 4437 231 5.21% -1.47% -0.84% -0.72% -0.56% HEROMOTOCO 4437 261 5.88% -1.68% -0.84% -0.82% -0.76% HINDUNILVR 4432 264 5.96% -1.60% -0.75% -0.65% -0.56% ICICIBANK 4430 253 5.71% -2.03% -1.06% -1.07% -1.16% INDUSINDBK 4438 224 5.05% -2.20% -0.91% -0.74% -0.14% INFY 4436 207 4.67% -1.66% -0.84% -0.68% -0.46% ITC 4432 260 5.87% -1.74% -0.89% -0.85% -0.78% KOTAKBANK 4437 238 5.36% -2.05% -0.96% -0.80% -0.57% LT 4413 260 5.89% -1.76% -0.85% -0.51% -0.48% MM 4438 284 6.40% -1.90% -0.94% -0.89% -0.75% MARUTI 4015 228 5.68% -1.67% -0.81% -0.64% -1.02% NESTLEIND 4429 199 4.49% -1.38% -0.82% -0.67% -0.22% ONGC 4438 285 6.42% -1.88% -0.93% -0.90% -1.22% POWERGRID 3022 150 4.96% -1.52% -0.83% -0.50% -0.41% RELIANCE 4430 261 5.89% -1.80% -1.00% -0.81% -0.58% SBIN 4433 294 6.63% -2.00% -1.06% -1.22% -0.94% SUNPHARMA 4426 264 5.96% -1.67% -0.70% -0.82% -0.69% TCS 3801 198 5.21% -1.43% -0.69% -0.44% -0.38% TATASTEEL 4430 269 6.07% -2.28% -1.25% -0.94% -0.78% TECHM 3299 199 6.03% -2.08% -1.17% -0.70% -0.07% TITAN 4433 279 6.29% -2.15% -1.34% -1.05% -0.87% ULTRACEMCO 3802 228 6.00% -1.70% -0.81% -0.60% -0.21%

Bearish engulfing pattern is twice frequent than its bullish counterpart. It appears around 6 % of the time. With no surprise this pattern is bearish indeed. On an average next day returns are around -1.0% however returns increases on coming sessions.

Dark-Cloud Cover

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 17 0.38% -1.43% 0.80% 1.32% 1.99% Axis Bank 4437 31 0.70% -2.23% 1.11% 1.74% 1.34% BAJAJ-AUTO 2865 10 0.35% -1.07% 0.40% -0.02% 0.29% Bajaj-Finance 4427 21 0.47% -2.01% 0.55% 0.81% 0.62% BHARTIARTL 4381 15 0.34% -2.13% 1.74% 2.23% 3.46% HCLTECH 4439 24 0.54% -1.74% 1.11% 1.13% 2.29% HDFC 4436 15 0.34% -1.80% 0.60% 0.19% -0.08% HDFCBANK 4437 20 0.45% -1.37% 0.58% 0.40% 0.66% HEROMOTOCO 4437 25 0.56% -1.64% 0.97% 0.99% 1.32% HINDUNILVR 4432 20 0.45% -1.47% 1.01% 1.17% 1.64% ICICIBANK 4430 20 0.45% -1.83% 1.19% 2.26% 2.03% INDUSINDBK 4438 26 0.59% -2.67% 1.01% 0.25% -0.08% INFY 4436 15 0.34% -1.57% 0.87% 0.87% 0.14% ITC 4432 24 0.54% -1.63% 0.72% 0.38% 0.85% KOTAKBANK 4437 21 0.47% -1.75% 0.43% 0.02% 0.65% LT 4413 20 0.45% -1.83% 1.24% 1.27% 1.99% MM 4438 21 0.47% -1.69% 0.78% 0.25% 0.18% MARUTI 4015 12 0.30% -1.56% 0.19% -0.05% -1.73% NESTLEIND 4429 9 0.20% -1.45% 0.76% 0.73% 1.48% ONGC 4438 19 0.43% -1.70% 1.02% 2.08% 2.53% POWERGRID 3022 17 0.56% -1.52% 0.97% 0.89% 1.61% RELIANCE 4430 25 0.56% -1.89% 0.57% 0.02% 0.58% SBIN 4433 21 0.47% -1.80% 0.99% 1.24% 1.03% SUNPHARMA 4426 23 0.52% -1.63% 0.57% 0.50% 0.68% TCS 3801 14 0.37% -1.44% 0.72% 0.91% 0.09% TATASTEEL 4430 29 0.65% -2.17% 0.90% 0.30% -0.08% TECHM 3299 10 0.30% -2.39% 1.44% 2.04% 1.85% TITAN 4433 22 0.50% -2.11% 1.50% 2.05% 2.06% ULTRACEMCO 3802 19 0.50% -2.18% 1.19% 1.23% 1.26%

Dark cloud cover is not as frequent as other, it appears hardly 0.5% of the times. Opposed to most technical analyst views, next day return are positive, around 1% on an average basis. With respect to bearish point of view it is not reliable signal.

PIERCING PATTERN

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 5 0.11% 1.67% -0.06% 0.94% 0.81% Axis Bank 4437 13 0.29% 2.04% 0.05% 0.69% 0.82% BAJAJ-AUTO 2865 4 0.14% 1.51% -0.42% -0.93% 0.68% Bajaj-Finance 4427 12 0.27% 1.60% 0.37% 0.61% -0.51% BHARTIARTL 4381 10 0.23% 2.32% -0.32% -0.02% 0.62% HCLTECH 4439 14 0.32% 2.46% -0.45% 0.28% 1.53% HDFC 4436 12 0.27% 1.87% -0.49% -0.11% -0.34% HDFCBANK 4437 13 0.29% 1.53% -0.45% -0.49% -1.02% HEROMOTOCO 4437 9 0.20% 1.51% -0.68% -0.72% -1.06% HINDUNILVR 4432 10 0.23% 2.10% -0.34% 0.68% 1.73% ICICIBANK 4430 10 0.23% 2.71% -1.49% -3.59% -2.59% INDUSINDBK 4438 17 0.38% 2.35% -0.04% 1.37% 3.08% INFY 4436 5 0.11% 1.54% -0.73% -1.11% -0.89% ITC 4432 8 0.18% 1.35% -0.20% -0.37% -0.23% KOTAKBANK 4437 14 0.32% 2.12% -0.50% 0.18% 0.00% LT 4413 10 0.23% 2.06% -0.67% -1.18% -0.65% MM 4438 7 0.16% 1.85% -0.05% 0.25% 1.06% MARUTI 4015 7 0.17% 1.62% -0.39% -0.31% -0.45% NESTLEIND 4429 9 0.20% 1.39% 0.02% -0.61% -1.22% ONGC 4438 13 0.29% 2.19% -0.17% -0.46% -0.68% POWERGRID 3022 11 0.36% 1.35% -0.54% -0.59% -0.24% RELIANCE 4430 9 0.20% 1.69% -0.53% -1.36% -1.51% SBIN 4433 16 0.36% 1.91% -0.49% -0.77% -0.71% SUNPHARMA 4426 8 0.18% 1.69% 0.10% -0.26% 0.68% TCS 3801 11 0.29% 2.68% -1.09% -1.23% 0.23% TATASTEEL 4430 18 0.41% 2.31% -0.98% -0.69% 0.17% TECHM 3299 6 0.18% 1.85% -0.15% 0.69% 2.98% TITAN 4433 5 0.11% 2.32% -1.06% -1.30% 1.71% ULTRACEMCO 3802 8 0.21% 1.59% 0.13% 0.27% 1.48%

Theoretically, it is bullish counter part of dark-cloud, however next session returns tell us different story. Next two sessions are bearish around -0.4% and -0.2% and week returns are slightly positive around 0.2%. The data debunks its preconceived notions of being bullish.It is not a reliable patterns with respect to bulls.

Shooting Star

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 66 1.49% 0.69% 1.63% 1.51% 1.41% Axis Bank 4437 67 1.51% 1.57% 3.28% 3.78% 4.35% BAJAJ-AUTO 2865 33 1.15% 0.89% 2.17% 2.12% 1.61% Bajaj-Finance 4427 63 1.42% 1.34% 2.42% 2.71% 3.42% BHARTIARTL 4381 43 0.98% 1.34% 3.27% 3.24% 3.11% HCLTECH 4439 55 1.24% 1.14% 2.72% 2.54% 2.21% HDFC 4436 46 1.04% 1.23% 2.24% 2.52% 2.26% HDFCBANK 4437 40 0.90% 1.02% 1.79% 1.19% 1.57% HEROMOTOCO 4437 50 1.13% 0.97% 2.71% 2.30% 2.29% HINDUNILVR 4432 34 0.77% 0.78% 2.44% 2.07% 2.20% ICICIBANK 4430 58 1.31% 1.50% 3.28% 2.62% 2.02% INDUSINDBK 4438 72 1.62% 1.63% 3.27% 3.37% 3.26% INFY 4436 50 1.13% 1.15% 2.24% 1.87% 1.09% ITC 4432 42 0.95% 1.06% 1.59% 1.25% 1.68% KOTAKBANK 4437 55 1.24% 1.45% 3.52% 2.71% 1.96% LT 4413 72 1.63% 1.05% 2.37% 1.90% 1.98% MM 4438 67 1.51% 1.02% 2.32% 2.28% 3.00% MARUTI 4015 54 1.34% 1.04% 1.99% 1.56% 1.81% NESTLEIND 4429 39 0.88% 0.85% 1.82% 1.41% 1.15% ONGC 4438 58 1.31% 1.40% 3.04% 2.56% 3.32% POWERGRID 3022 30 0.99% 1.08% 1.98% 1.92% 2.27% RELIANCE 4430 64 1.44% 0.98% 2.02% 1.53% 1.54% SBIN 4433 69 1.56% 0.95% 2.10% 1.81% 2.40% SUNPHARMA 4426 58 1.31% 0.98% 2.00% 2.40% 1.83% TCS 3801 48 1.26% 0.91% 2.16% 2.20% 2.06% TATASTEEL 4430 84 1.90% 1.18% 2.64% 2.68% 2.45% TECHM 3299 72 2.18% 0.99% 2.58% 3.08% 2.87% TITAN 4433 89 2.01% 1.29% 2.83% 2.88% 2.89% ULTRACEMCO 3802 41 1.08% 0.87% 1.68% 1.75% 1.31%

Contrary to conventional wisdom, shooting star is pretty bullish. Next day returns are around 2.5% on an average basis.

Morning Star

ticker Num of Days Count Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 9 0.2% 2.3% 1.8% 0.8% 2.1% Axis Bank 4437 18 0.4% 3.1% 2.2% 0.2% -1.1% BAJAJ-AUTO 2865 8 0.3% 3.5% 2.4% 1.1% 1.9% Bajaj-Finance 4427 12 0.3% 4.6% 2.6% -0.9% -0.5% BHARTIARTL 4381 21 0.5% 3.5% 2.5% 0.7% 0.5% HCLTECH 4439 20 0.5% 3.8% 2.8% 0.3% -0.3% HDFC 4436 24 0.5% 3.6% 2.6% 0.7% 0.2% HDFCBANK 4437 14 0.3% 2.8% 2.2% 0.6% 0.4% HEROMOTOCO 4437 24 0.5% 3.0% 2.3% 0.7% 1.3% HINDUNILVR 4432 20 0.5% 2.3% 1.6% 0.0% 0.7% ICICIBANK 4430 15 0.3% 3.1% 2.1% 0.1% 0.4% INDUSINDBK 4438 15 0.3% 2.8% 2.3% 0.7% 1.1% INFY 4436 18 0.4% 2.6% 1.8% -0.5% 0.2% ITC 4432 19 0.4% 2.6% 1.9% 0.2% -0.4% KOTAKBANK 4437 17 0.4% 3.0% 2.0% 0.1% 0.5% LT 4413 14 0.3% 2.8% 2.1% 0.0% -0.1% MM 4438 12 0.3% 3.7% 2.5% -0.1% 0.0% MARUTI 4015 8 0.2% 2.4% 1.5% -1.0% -1.8% NESTLEIND 4429 13 0.3% 2.2% 1.4% 0.0% 0.1% ONGC 4438 9 0.2% 3.2% 1.9% -0.8% 1.0% POWERGRID 3022 13 0.4% 3.2% 2.4% 0.0% 0.3% RELIANCE 4430 22 0.5% 3.2% 2.1% 0.4% 1.3% SBIN 4433 13 0.3% 3.2% 2.1% 0.3% -0.1% SUNPHARMA 4426 10 0.2% 4.1% 2.7% 1.2% 0.7% TCS 3801 9 0.2% 2.9% 2.1% 0.4% 0.1% TATASTEEL 4430 18 0.4% 3.9% 3.2% 0.9% 2.3% TECHM 3299 8 0.2% 4.9% 3.4% 1.5% 4.6% TITAN 4433 13 0.3% 6.2% 4.4% 1.1% 1.6% ULTRACEMCO 3802 14 0.4% 3.8% 2.4% 0.1% 1.3%

One of the rare pattern appear only around 0.3 % of the time. Its is bullish indeed, pretty reliable with next day returns are around 2.5%. However strong positive returns fades over next week.

Evening Star

Ticker Num of Days Count Frequency of pattern Same Day Avg Ret Next Day Avg Ret Two Day Avg Ret Week Avg Ret ASIAN PAINTS 4438 22 0.50% -1.96% -1.29% 0.49% 0.18% Axis Bank 4437 26 0.59% -3.27% -2.52% 0.44% 1.25% BAJAJ-AUTO 2865 16 0.56% -1.63% -1.18% 0.35% 0.69% Bajaj-Finance 4427 17 0.38% -3.05% -2.22% 0.33% 1.87% BHARTIARTL 4381 27 0.62% -3.25% -2.42% 1.07% 1.98% HCLTECH 4439 31 0.70% -2.77% -2.01% 0.87% -1.03% HDFC 4436 27 0.61% -2.29% -1.71% 0.40% 0.95% HDFCBANK 4437 23 0.52% -2.99% -2.31% 0.02% 0.09% HEROMOTOCO 4437 16 0.36% -2.38% -1.94% 0.26% 0.51% HINDUNILVR 4432 28 0.63% -2.22% -1.68% 0.43% 1.13% ICICIBANK 4430 28 0.63% -2.79% -2.05% 0.25% -0.56% INDUSINDBK 4438 22 0.50% -3.73% -2.68% 1.06% 1.12% INFY 4436 29 0.65% -2.23% -1.75% 0.67% 0.20% ITC 4432 31 0.70% -2.30% -1.71% 0.37% 1.32% KOTAKBANK 4437 31 0.70% -3.46% -2.70% 0.75% 1.71% LT 4413 22 0.50% -2.39% -1.73% 0.61% 0.26% MM 4438 32 0.72% -3.05% -2.17% 0.82% 1.31% MARUTI 4015 28 0.70% -2.34% -1.69% 0.86% 1.60% NESTLEIND 4429 16 0.36% -2.08% -1.67% 0.31% 1.73% ONGC 4438 30 0.68% -2.63% -1.74% 1.13% 1.86% POWERGRID 3022 16 0.53% -2.38% -1.68% 0.14% -0.04% RELIANCE 4430 30 0.68% -2.29% -1.56% 0.63% 0.30% SBIN 4433 31 0.70% -2.71% -2.08% 0.10% 0.56% SUNPHARMA 4426 28 0.63% -2.09% -1.42% 0.68% 1.27% TCS 3801 27 0.71% -2.90% -2.15% 0.48% 0.82% TATASTEEL 4430 27 0.61% -3.71% -2.67% 0.66% 0.92% TECHM 3299 28 0.85% -3.32% -2.72% 0.52% 1.64% TITAN 4433 27 0.61% -3.43% -2.33% 0.89% 1.50% ULTRACEMCO 3802 14 0.37% -2.06% -1.54% 0.21% 1.68%

The evening star is a bearish equivalent of the morning star. Like morning star, it is rare, agree conventional wisdom. It is bearish, with next day return are around -2.0%.

I hope above analysis would be helpful for a holistic understanding of candlestick chart performance.

More reversal patterns to be updated: