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Black Candle
The black candlestick shows near random direction under actual market conditions since it acts as a continuation 52% of the time. In theory, it can act as either a continuation candlestick or a reversal. The only thing remarkable about this candlestick is its frequency: 3rd out of 103 where 1 is the most common. Performance over 10 days is about what you would expect: close to last place (ranking 82).
Black Candle: Important Results
Theoretical performance: Reversal or continuation Tested performance: Continuation 52% of the time Frequency rank: 3 Overall performance rank: 82 Best percentage meeting price target: 84% (bear market, down breakout) Best average move in 10 days: -6% (bear market, down breakout) Best 10-day performance rank: 19 (bear market, down breakout) All ranks are out of 103 candlestick patterns with the top performer ranking 1. “Best” means the highest rated of the four combinations of bull/bear market, up/down breakouts. The above numbers are based on hundreds of perfect trades. See the glossary for definitions. |  Black Candlestick |
Black Candle: Discussion
In theory, a black candlestick can act as either a reversal or continuation of the existing price trend. In testing, I found that it acts as a continuation 52% of the time, which is almost like saying the breakout direction is random. On a scale of 1 to 103, the black candle placed third for frequency, where 1 is best. That means the candle is as plentiful as beach sand in your shoes after a picnic on the lakeshore. The rank for overall price performance over 10 days is a dismal 82, well behind the herd.
A bear market after a downward breakout is where the black candlestick gets its strength. It meets the predicted price target 84% of the time, drops 6% in 10 days, on average, and ranks 19th for that performance under those conditions.
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.
Black Candle: Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | One. |
| Price trend leading to the pattern | None required. |
| Configuration | Look for a black colored candle of average size with shadows that are smaller than the body height. |
Black Candles: Three Trading Tidbits
- Black candles that appear within a third of the yearly low perform best — page 149.
- Black candles taller than the median show price that moves almost twice as far after the breakout as those shorter than the median — page 149-150.
- If the day price closes above or below the top/bottom of the candle is on high volume, expect a larger price move than on those days that have light breakout volume — page 150.
Black Candle: Example
Candle A begins the downtrend after a black candle with a tall upper shadow. Candle B looks as if it reverses the downtrend — at least for a while. Candle C ends the swift down draft and price moves horizontally for a few days before rebounding. Can you tell anything from these three black candles?
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