Separating Lines Bullish candlestick pattern

Today we test the Separating Lines bullish candlestick pattern. This is part of a series of tests we are conducting to measure the efficacy of candlestick patterns.

This is the description as per the Lit Wick website

How to Identify it- Separating Lines:

• The first day is a black day
• The second day is a white day that has the same opening price as the first day

As always if the term “Long” is used in the description, we will define “long” as a range that is greater than the 20 day moving average of range. When we test the pattern in a uptrend, we define uptrend as a close greater than the 50 day moving average and yesterdays 50 day moving average is greater than the prior days 50 day moving average.

We tested this pattern on every one of the S&P 500 stocks since 1990 and compared the performance results to the average 5 day move in all the S&P 500 stocks. The entry was at the open on the day after the Rising three methods pattern setup and the exit was at the open 5 trading days after entry.

This is what the Separating lines candlestick pattern look like with a close on the 2nd day that is below the high of the first day.




Below are the results of the Separating lines candlestick patterns, separating lines with a close on the 2nd day above the high of the first day and a separating lines pattern with a close on the 2nd day below the the high of the first day. As a comparison the average 5 day holding period of all the S&P 500 stocks and all the other candlestick patterns that we have tested to date.