Rising Window Candle Pattern
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Rising Window Candlestick: Important Results
Theoretical performance: Bullish continuation Tested performance: Bullish continuation 75% of the time Stopped in gap: 20% Frequency rank: 20 Overall performance rank: 42 Average time to gap closed: 79 days Median time to gap closed: 11 days The above numbers are based on hundreds of perfect trades. See the glossary for definitions. |  Rising Window |
Rising Window Candlestick: Discussion
As I mentioned in the introduction, the rising window is a space left on the price chart. On the daily chart, a surprisingly good earnings announcement or other corporate event can create a gap. The rising window acts as a bullish continuation pattern 75% of the time, which is very good. The overall performance rank is 42, but that really measures the price trend surrounding the rising window and not the window itself.
One of the more interesting statistics from Important Results is the stopped in gap number. For a rising window, this is the percentage of time that a minor low appeared within the gap before price closed the gap. In other words, a gap showed underlying support 20% of the time.
Rising Window Candlestick: Example
The chart of 3M shows many different windows, some rising and some falling. A falling window will appear in a downward price trend, such as that shown at point A. The day after the white candle, price gaps open lower and struggles to close the gap throughout the day, but cannot do it. A hole remains on the chart.
The other points, B, C, and D, are all gaps called rising windows. Those have a high price on one day that remains below the low of the next day, leaving a hole on the chart.
One of the secrets to rising and falling windows is to determine the gap type. Rising window B, for example, is a breakaway gap because it breaks away from the small congestion area. C is an exhaustion gap because the price trend ends soon after. Point D is an area or common gap because price closes that gap shortly after it appears.
What type of gap is falling window A? Since price is trending lower, it is probably an exhaustion gap and not an area gap.
