Effectiveness of candlestick chart patterns in today's commodity market

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Bindlish, Sameer
Issue Date
MBA in Finance
Dublin Business School
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Japanese candlestick charts were first introduced to the Western world in 1989 by Steve Nison. No one in the West got to know about the Japanese technical analysis before the first edition of his textbook, and no charting packages included them either prior to the first edition. Japanese candlestick patterns have become very popular since then. Japanese candlestick patterns are technical trading rules that are used to predict price directions based on the relationship between openings, high, low and closing prices. Currently many market participants are implementing Japanese candle patterns as part of their robust trading systems. This research examines the profitability of four bullish and four bearish Japanese candlestick reversal patterns in four commodities which represent both advanced and emerging commodity markets. These commodities include Gold, Silver, Crude Oil and Natural Gas. Further this paper will try to develop a strategy which can increase the return over traditional way of doing a trade.