A Comprehensive Look at the Predictive Information in Japanese Candlestick

Abstract This article takes a comprehensive look at the performance of Japanese Candlestick in forecasting equity returns. We find that Japanese Candlestick does provide predictive information in both in-sample (IS) and out-of-sample (OOS) forecasts; and there is significant information spillover from the U.S equity market to the other markets. The results obtained are instructive to traders and portfolio managersbut challenging to academic claims.