Edition

IFTA JOURNAL
2017 EDITION
Clarification of the Calculation
Method of the Target Levels of
Japanese Candlestick Patterns by
Using Patterns Confirmation Filters
The following is a detailed explanation of the method of this
study for calculating the target levels of Japanese candlestick
patterns.
Figure 2. Siemens (SIEGn.DE) from 05-03-2009 to 01-10-
2009: An example of how to calculate the bullish target
100% of thrusting pattern (successful pattern)
The Positive Closing Above the Upper Filter
This closing is considered as confirmation for the positive
Japanese candlestick patterns (or failure for the negative
Japanese candlestick patterns), and you can use the following
mathematical equations to calculate the targets of the positive
closing above the upper filter based on the Fibonacci ratios
(61.8%, 50%, 38.2%, and 23.6%) in addition to the 100% ratio:
• Bullish Target 100% = F2 + [(F1 - F2) × N]
• Bullish Target 61.8% = F2 + [(F1 - F2) × N × 0.618]
• Bullish Target 50% = F2 + [(F1 - F2) × N × 0.50]
Figure 3. BT Group (BT.L) from 01-11-2010 to 16-05-2011:
An Example of how to calculate the bullish target 61.8%
of dark cloud cover pattern (failed pattern)
• Bullish Target 38.2% = F2 + [(F1 - F2) × N × 0.382]
• Bullish Target 23.6% = F2 + [(F1 - F2) × N × 0.236]
Where:
F1: upper filter level.
F2: lower filter level.
N: Number of candles that closed between the upper filter
level (F1) and the lower filter level (F2) of Japanese candlestick
pattern.
Figures 1 through 5 show examples of how to calculate the
bullish target levels.
Figure 1. An example of how to calculate the bullish
target 100% of Takuri pattern (successful pattern)
Figure 4. Anglo American (AAL.L) from 08-09-2010 to
29-12-2010: An example of how to calculate the bullish
target 50% of upside Tasuki gap (successful pattern)
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