Deliberation

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Figure 1. Deliberation pattern.

Figure 1. Deliberation pattern.

Forecast: bearish reversal
Trend prior to the pattern: uptrend
Opposite pattern: none
See also: Advance Block

Construction:

  • First candle
    • a candle in an uptrend
    • white body
  • Second candle
    • white body
    • the opening price is above the previous opening price
    • the closing price is above the previous closing price
  • Third candle
    • white body
    • the opening price is slightly lower or higher than the previous closing price
    • the closing price is above the previous closing price

 

The Deliberation is a three-line bearish reversal candlestick pattern. It is formed by three white candlesticks. The first and the second line of the pattern have long bodies. The third candle has shorter body than two previous candles. Every next candle is opening above the prior opening price. The same applies for the closing prices. The third candle appears as a short line and can be one of the following: Short White Candle or White Spinning Top. The opening price of the last candle is slightly lower or higher than the previous closing price.

Shimizu provides somewhat different characteristic of the Deliberation pattern. The first candle is short, the second one is long, indicating a significant upward move (a price gap is visible in the diagram of his book). The third candle is short what indicates that the bulls are exhausted of attempting to push price higher.

Because all pattern's candles have white bodies, the pattern acts as a support zone. The pattern is confirmed if the bears manage to move price down below the first candle opening price.

Figure 2.

Figure 2. It rarely happens that a price drop immediately follows a Deliberation pattern. The market usually "deliberates" during 2-4 candles following a pattern, about into which direction to go.
Such behavior may be explained by the pattern's construction, presented on the chart. The bulls are pushing price up on two first white candles. On the third candle, they form a short white candle, however, indicating that the bears counterattack. Two first pattern's lines create a support area.
On the chart, two first candles are formed at a high trading volume, which makes the support zone stronger. The third candle is classified as a Short White Candle, formed at a lower trading volume than two previous candles. The short body indicates indecision (deliberation) over direction, which lasts 3 days. The market "deliberation" is located within the area drawn by the last pattern's line. On the fourth day the market opens lower than the third pattern's candle closing price. A Long Black Candle appears at a very high trading volume and the bears are in full control.
The Deliberation pattern is widely discussed, and quite often is wrongly interpreted because some traders expect it to work immediately after its appearance. The pattern's name, deliberation, explains well the market situation.

 

Figure 3.

Figure 3. While discussing the Japanese candlestick patterns, we always are emphasizing the importance of assessing the market context in which a particular pattern occurred. A common beginner's mistake is to use also data following a pattern, which normally is impossible, as we cannot know the future when a pattern appears.
On the chart, we see a Deliberation pattern preceded by an uptrend lasting from the beginning of August 2010. Within that time, the market moved up by 10%. The second line of the pattern shows weakness because a trading volume decreases. The third line is formed at even lower trading volume, much smaller than an average.
The pattern is followed by a black candle opening lower than the previous candle. The market tries to move down skipping "deliberation" phase, which is unusual for that pattern. However, there is a problem: low trading volume.
Indeed, the Deliberation pattern caused price pause for several days before the climb resumes.

 

Deliberation statistics

Below you can find some Deliberation pattern statistics calculated by CandleScanner software. To see more detailed statistics, for other markets and periodicity try our CandleScanner software.

Pattern name: Deliberation
Scanner settings: daily stocks
Group: S&P500
Number of symbols: 502
Date range: 7/1/1995 - 6/30/2015
Time interval: daily candles
Total number of candlesticks: 2,236,421
Number of occurrences (Deliberation): 2,708
Number of occurrences (all candlestick patterns): 638,570
% of occurrences (Deliberation): 0.42 %
Average frequency: 825.9
Efficiency statistics (5 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
0 333 1,196 645 534
% of
Occurrences
0.00 % 12.30 % 44.17 % 23.82 % 19.71 %

 

Efficiency statistics (10 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
2 298 939 607 862
% of
Occurrences
0.07 % 10.93 % 34.68 % 22.42 % 31.90 %

 

10 top best performing symbols

Occurrences Statistics 5 candlesticks testing period
(HIGH efficiency)
10 candlesticks testing period
(HIGH efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
DLTR 6 839.0 4 66.66 % 5 83.33 %
EMC 6 839.0 4 66.66 % 5 83.33 %
BEN 13 387.2 7 53.85 % 10 76.93 %
EXC 7 719.1 2 28.57 % 5 71.42 %
AET 6 839.0 2 33.34 % 4 66.67 %
ARG 6 839.0 2 33.33 % 3 66.66 %
CNX 6 678.2 3 50.00 % 4 66.66 %
MHK 6 839.0 3 50.00 % 4 66.66 %
ADI 7 719.1 2 28.57 % 4 57.14 %
AGN 7 719.1 3 42.85 % 4 57.14 %

 

10 top worst performing symbols

Occurrences Statistics 5 candlesticks testing period
(FALSE efficiency)
10 candlesticks testing period
(FALSE efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
TSS 7 719.0 5 71.43 % 5 71.43 %
PCG 8 629.3 5 62.50 % 5 62.50 %
LM 8 629.3 4 50.00 % 4 50.00 %
MTB 8 627.4 4 50.00 % 4 50.00 %
TAP 8 629.3 4 50.00 % 4 50.00 %
WFM 7 719.1 3 42.86 % 3 42.86 %
BBT 11 457.6 5 45.45 % 4 36.36 %
AET 6 839.0 2 33.33 % 2 33.33 %
AMP 6 408.7 3 50.00 % 2 33.33 %
LEG 6 839.0 2 33.33 % 2 33.33 %
Pattern name: Deliberation
Scanner settings: daily stocks
Group: S&P500
Number of symbols: 502
Date range: 7/1/2010 - 6/30/2015
Time interval: daily candles
Total number of candlesticks: 614,034
Number of occurrences (Deliberation): 1,073
Number of occurrences (all candlestick patterns): 166,328
% of occurrences (Deliberation): 0.65 %
Average frequency: 572.3
Efficiency statistics (5 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
0 122 541 240 170
% of
Occurrences
0.00 % 11.37 % 50.42 % 22.37 % 15.84 %

 

Efficiency statistics (10 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
2 105 411 255 300
% of
Occurrences
0.19 % 9.60 % 38.30 % 23.77 % 28.14 %

 

10 top best performing symbols

Occurrences Statistics 5 candlesticks testing period
(HIGH efficiency)
10 candlesticks testing period
(HIGH efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
CF 4 314.5 3 75.00 % 4 100.00 %
PPG 3 419.3 0 0.00 % 3 100.00 %
SWN 3 419.3 3 100.00 % 3 100.00 %
ARG 3 419.3 1 33.33 % 2 66.67 %
PKI 3 419.3 1 33.34 % 2 66.67 %
AEE 3 419.3 2 66.67 % 2 66.67 %
AIZ 3 419.3 1 33.33 % 2 66.67 %
BIIB 3 419.3 2 66.67 % 2 66.67 %
CNX 3 419.3 1 33.33 % 2 66.67 %
CRM 3 419.3 2 66.67 % 2 66.67 %

 

10 top worst performing symbols

Occurrences Statistics 5 candlesticks testing period
(FALSE efficiency)
10 candlesticks testing period
(FALSE efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
TSS 5 251.6 3 60.00 % 3 60.00 %
DISCA 4 314.5 2 50.00 % 2 50.00 %
OMC 4 314.5 2 50.00 % 2 50.00 %
USB 4 314.5 2 50.00 % 2 50.00 %
ADP 5 251.6 2 40.00 % 2 40.00 %
AME 5 251.6 2 40.00 % 2 40.00 %
AMP 5 251.6 3 60.00 % 2 40.00 %
GD 5 251.6 2 40.00 % 2 40.00 %
MKC 5 251.6 2 40.00 % 2 40.00 %
ANTM 6 209.7 2 33.33 % 2 33.33 %

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