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Profitable candlestick trading strategies—The evidence from a new perspective
Author(s) -
Lu TsungHsun,
Shiu YungMing,
Liu TsungChi
Publication year - 2012
Publication title -
review of financial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 41
eISSN - 1873-5924
pISSN - 1058-3300
DOI - 10.1016/j.rfe.2012.02.001
Subject(s) - profitability index , economics , robustness (evolution) , econometrics , stock (firearms) , technical analysis , financial economics , stock market , business , finance , engineering , geography , mechanical engineering , biochemistry , chemistry , context (archaeology) , archaeology , gene
This paper aims to investigate the profitability of two‐day candlestick patterns by buying on bullish (bearish) patterns and holding until bearish (bullish) patterns occur. Our data set includes daily opening, high, low, and closing prices of component stocks in the Taiwan Top 50 Tracker Fund for the period from 29 October 2002 through 31 December 2008. We examine three bullish reversal patterns and three bearish reversal patterns. We find that three bullish reversal patterns are profitable in the Taiwan stock market. For robustness checks, we evaluate the applicability of our results to diverse market conditions, conduct an out‐of‐sample test and employ a bootstrap methodology.