Candlestick Combos
motivated by e-mail from Ken G
We talked about candlesticks before, identifying certain types like so:

>I remember those shaven bottoms!
Pay attention.
We even had a couple of spreadsheets that looked for certain types of candles,
like hammers and dojis ... but we never looked for 2- or 3-day patterns.

>Can you just show the spreadsheet?
Okay, but first an explanation of what we're looking for:
  • You download a bunch of stock data (5 years worth).
  • You choose four successive candle patterns like this, for example:
  • Then you click a button and the spreadsheet will try to find a matching pattern in the downloaded data.
    However, it only checks two things:
    1. Does the data have 4 successive days with the same colours (Red or Green)?
      Red means the Close is lower than the Open. Green means the stock closes higher than the Open.
    2. Is the Body/Shadow ratio the same as the Search Pattern?
  • In the example on the right, the Body/Shadow Ratio is 0.567 for the Reds and 0.233 for the Green.

Figure 1
>And you expect to find exactly those ratios in the downloaded data? Good luck!
I agree ... that's unlikely, so:

  • The spreadsheet has a couple of "Factors": F and G which you can specify.
  • If the Body/Shadow Ratio of a specified candle is R, the spreadsheet looks for Body/Shadow Ratios in the downloaded data satisfying:
    G R ≤ Body/Shadow Ratio ≤ F R.
    In the example (Figure 1), R = 0.567. If G = 0.5 and F = 1.5 the spreadsheet will identify red candles where:
    0.5 (0.567) ≤ Body/Shadow ≤ 1.5 (0.567)   that is   0.28 ≤ Body/Shadow ≤ 0.84.

>Can you just show the spreadsheet?

>What are all those buttons?
Click on the picture, download the spreadsheet and play with them.