The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re answering the question, “Are engulfing candlestick patterns reliable for trend changes?” This is a question that was submitted by one of our members. I think it’s a valid question and we don't often talk about candlestick patterns, but it's something that I think I intuitively look at because I use candlestick charts. And so, I think there's a little bit of insight the can be gained by candlesticks. Again, it just gives you a broad context of where the market has performed on a given day. I think when we talk about a trend change though, that to me is more of a long-term trend change, so going from a bull market to a bear market or say a bullish run to a bearish run which could take many months. I don't necessarily believe that one single candlestick pattern could be insanely reliable for that type of market move and I definitely haven't seen any research that confirms this. But I think in a vacuum for a c