Abstract
This paper investigates the effectiveness of candlestick patterns in cryptocurrency trading. Our data set includes historical daily opening, high, low, and closing prices of the top 23 cryptocurrencies by market capitalization. We examine 68 commonly used candlestick patterns using statistical analysis and find that the studied candlestick patterns are of little use in cryptocurrency trading. On the contrary, there are more patterns with relatively low accuracy. Investors should be cautious with their trading strategies and decisions when these patterns appear, as they may be a false trading signal that could cause losses rather than gains. To the best of our knowledge, this paper is one of the first research studies to investigate the effectiveness of candlestick patterns in cryptocurrency trading. Our findings could serve as a reference for investors when developing cryptocurrency trading strategies.
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