Arizona, USA
Experience: Intermediate
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Trading: Cello
Posts: 116 since Jan 2011
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No, this isn't another academic paper arguing for the Efficient Market Hypothesis. This paper is actually interesting and useful.
The authors took well-known candlestick patterns and performed a statistical test on out-of-sample S&P 500 data to quantify the efficiency of patterns in determining when the market turned.
Interestingly, they found that the candlestick patterns worked extremely well, with a statistical significance of 36 standard deviations. [A 36 sigma significance means they are dead sure of their conclusion.]
A worthwhile read. I have only read the introduction and discussion, and scanned the rest.
https://www.pitt.edu/~caginalp/Paper65.pdf
I am in no way connected to the authors of this paper.
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