In his extensive investigation of candlestick patterns, Thomas Bulkowski noted that Above the Stomach is a bullish reversal pattern that performs well in both bull and bear markets. His conclusion was based on careful examination of almost 17,000 pattern samples (Encyclopedia of Candlestick Charts, Hoboken: John Wiley & Sons, 2008).
For a conscientious trader, an introduction to Above the Stomach must include answers to two important questions. How does this pattern materialize on a chart? What makes it useful for profitable trading?
Even though Above the Stomach is a bullish reversal pattern, it can appear when markets are trending upward or downward. This fact alone makes the pattern an attractive and flexible tool for swing trading. Since all expressions of Above the Stomach are not exactly the same, however, we must examine the pattern across various stocks and under different market conditions to acquire a more complete picture of performance.