Do chart patterns actually work? We tested 11 of them
Chart patterns are taught as if they were established facts. They are testable claims, so we tested them: 758,032 daily sessions across 153 S&P 500 names, 2005-01-01 to 2025-01-01.
5 of 11 moved the odds at all. 2 of those moved them the opposite way to the textbook.
Bars to the right of the line were followed by more up closes than an ordinary bar, bars to the left by fewer. A faded bar failed the significance test, which means the gap is no bigger than chance produces at this sample size.
| Pattern | Textbook says | Instances | Higher in 5 days | vs base rate | Verdict |
|---|---|---|---|---|---|
| RSI overbought | bearish reversal | 55,842 | 52.4% | -2.3 pts | works as advertised |
| 60-day high breakout | bullish continuation | 79,949 | 52.6% | -2.1 pts | works, backwards |
| Hammer | bullish reversal | 5,953 | 53.8% | -0.9 pts | no measurable effect |
| Bearish engulfing | bearish reversal | 14,930 | 54.8% | +0.0 pts | no measurable effect |
| Golden cross | bullish trend change | 2,190 | 54.8% | +0.0 pts | no measurable effect |
| Doji | indecision, possible reversal | 79,778 | 55.1% | +0.3 pts | no measurable effect |
| Death cross | bearish trend change | 2,128 | 55.5% | +0.7 pts | no measurable effect |
| Shooting star | bearish reversal | 6,672 | 55.9% | +1.1 pts | no measurable effect |
| Bullish engulfing | bullish reversal | 8,426 | 56.0% | +1.3 pts | works as advertised |
| RSI oversold | bullish reversal | 21,040 | 57.8% | +3.1 pts | works as advertised |
| 60-day low breakdown | bearish continuation | 32,189 | 58.0% | +3.3 pts | works, backwards |
Sorted weakest to strongest. "vs base rate" is the gap against the 54.7% of all bars in this sample that closed higher five sessions later. Generated 2026-08-11.
What the table says
The candlestick patterns are the weakest group. The hammer, the doji, the shooting star and the bearish engulfing bar are among the most searched terms in technical analysis, and none of them separates from the base rate. The golden cross, which reliably makes headlines, is exactly flat across 2,190 occurrences.
The two conditions that work best both run backwards. A close at a 60-day high is taught as strength that continues, and is followed by below-average returns. A close at a 60-day low is taught as weakness that continues, and is the most bullish condition in the backtest. Over one week on large-cap US stocks, the extremes mean revert rather than continue.
What people do about it
Knowing which signals work is only half the question. The other half is what readers actually do when they see one, and that needs a crowd calling the same blind chart. On Read the Tape, across 165 settled charts, the textbook lean was right on 49.7% of them. The crowd followed it on 77.0%.
Those are chart counts, not call counts. Every player sees the same five charts a day, so 26,880 calls do not make 165 charts into 26,880 independent trials. At this sample the textbook is not yet distinguishable from a coin flip, which is itself worth stating given what it claims. Updated 2026-08-25.
How this was measured
Every pattern is scored the same way. Take 153 S&P 500 names, 2005-01-01 to 2025-01-01, which is 758,032 daily sessions. Mark every bar where the pattern completes, using only information available at that bar. Measure the close 5 trading sessions later, the same horizon the game itself uses. Compare against the base rate across all bars in the same sample, which is 54.7% higher after five sessions.
The comparison is a two-sided test of proportions and the threshold is the conventional 5%. "No measurable effect" means the pattern failed that bar, not that the effect is exactly zero. The code is one file and the definitions are written out in full on each page, so you can disagree with a threshold and see what it changes.
What this does not show
These are unconditional five-day results on large-cap US stocks over one twenty-year window. They say nothing about intraday trading, about other markets, or about a pattern used in combination with something else. A trader who uses the hammer as one input among several is not tested here. Neither is any pattern at a horizon other than five sessions, and a signal can be useless over a week and useful over a quarter.
These results are published under CC BY 4.0. Quote the figures or rebuild the table anywhere you like, with credit to Read the Tape and a link back to this page.
Call five blind charts yourself →