Product Review: Japanese Candle Pattern Recognition by Dennis D. Peterson
Japanese Candle Pattern Recognition (Jcpr) is a MetaStock plug-in developed under the guidance of technician Greg Morris. I first encountered Morris’s work when I started reading his book Candlestick Charting Explained. It had all the usual images of candlestick patterns, but it also had tables that gave statistics on reliability and frequency of occurrence for each of the patterns. It also held some surprising facts: you shouldn’t expect the predictive capability of a pattern to be more than a week. In other words, candlestick patterns are relatively short-lived. The book stood out as an extremely insightful narrative. But that was his first book, and it was superseded by later editions, the third published in 2006, and it is this later work that has data more relevant to this plug-in.
If you listen to Morris’s webinar for this plug-in, you will be struck by his thoroughness about the topic. What impressed me was his diligence in tracking down the patterns to create statistics. He is the chief technical analyst and chairman of the investment committee for Stadion Money Management and manages $7 billion in assets. Greg Morris is someone you want to listen to, and this product incorporates many of his principles. It was in development for a year and half.
Morris provides some background information in his webinar, which is repeated to some extent in the manual that comes with the CD. When referring to periods here, my review will almost always use days, and while it can be argued that the software allows a full range of periods, Greg Morris makes a convincing argument that candlestick pattern analysis is based on days.