CandlestiCK Charting in European stock markets

The purpose of this study is to investigate whether an old Japanese trading technique can function in a Western context. This paper employs a 1 4 vector to categorise two-day candlestick patterns systematically, and then examines their profitability for the FTSE 100, DAX 30 and CAC 40 component stocks. After conducting statistical tests and the bootstrap methodology, we find that three patterns can produce profits after considering transaction costs in the major European stock markets. We also investigate the effects of the global financial crisis on the efficacy of the candlestick method.

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