Candlesticks have proven to be pretty complex and really quite interesting. (I've also been on holiday).
The whole premise of Candlesticks is that the relationship between the open, high, low and close of a stock in the previous 2 to 3 periods (days in our case), indicates, through the use of pattern recognition, probabilities of rises.
So my thinking is this:
1. calculate the Markov Chains for each period indicating the:
-1a. 3 open/close situations (3 periods, today, yesterday and the day before and if the open is above or below the close),percentage increase over the subsequent 5 days
-1b. 3 individual indicators stating the usual Candlestick derivatives
-1c. 2 relative indicators detailing the relationship between the periods
-1d. the percentage increases for the subsequent 5 days
(1b, 1c and 1d taken together with an indicated rise or fall can be thought of as the well known Candlestick indicators that have been observed to indicate patterns that if popular have been given names (hanging-man lines, dark-cloud covers, evening stars, etc))
2. Calculate the daily Candlestick indicators and compare to the Markov Chains created previously
3. Tweet results
The Markov Chains are currently set at greater than 11.5% rise for greater than 80% of the time for the subsequent 5 days, and yield results such as:
...
81.42 uuu0202021808 BAC 5 100 5 0
88.83 uuu0202021313 NLMA 181 98.34 178 3
33.79 uuu0202021313 IHTD 38 97.37 37 1
73.63 uuu0202020808 BAC 34 97.06 33 1
49.4 uuu0303031212 EEE 32 96.88 31 1
121.01 uuu0202021313 YKBD 291 96.56 281 10
...
The columns indicate, the percentage increase, the Candlestick indicator, the company, the number of times this indicator has triggered, the percentage that this indicator has been over 11.5%, the number of times it has been over the 11.5% and the number of times it has been less than 11.5%.
So we see above, finding an indicator for the company NLMA of uuu0202021313 today would indicate a 98.34% chance that over the next 5 days this stock will rise more than 11.5%, but the current average percentage increase is 88.83% for a result set of 181 times this Candlestick indicator has been triggered.
The '...' indicate that this is in the middle of a report.
Lets see some interesting Candlesticks that indicate a rise 100% of the time:
...
22.56 uuu0202021818 LTHP 22 100 22 0
34.29 uuu0505051717 CRL 14 100 14 0
15.84 uuu0202021313 GLDE 12 100 12 0
34.34 uuu0202021919 INDG 9 100 9 0
16.5 ddd0505051818 HAMP 9 100 9 0
37 uuu0202021819 INDG 8 100 8 0
159.43 uuu0202022004 BAC 8 100 8 0
36.97 uuu0202021918 INDG 7 100 7 0
15.99 uuu0202021413 GLDE 7 100 7 0
73.96 uuu0602020108 BAC 7 100 7 0
16.97 ddd0404041313 PCH 7 100 7 0
32.91 uuu0202021414 CMCI 7 100 7 0
...
Even though we get figures on LTHP, I cannot find this company on LSE, but looking at CRL (Creightons), for uuu0505051717, this should indicate a greater than 11.5% increase over the subsequent 5 days, and currently an average increase of 34.29% over the last 14 times this has occurred.
From the above, one can see that the first 3 period indicators are usually either all up or all down - as an example, for PCH (Pochins Share Price (PCH)), just for these 3 indicators, if the close is lower than the open on 3 successive days, and that the other indicators are 04,04,04,13,13; then we currently have a 100% chance (out of a set of 7 instances) that PCH will rise more than 11.5% over the next 5 days, with the current average being a price rise of 16.97%.
I am now tweeting these under the indicator 'LSE_cs' - see at the top for the Twitter page.
