Thrusting Candlestick Pattern Backtested (2024)

The thrusting pattern, also known as the thrusting line, is a rare two-bar bearish continuation pattern that’s best traded using a bullish mean reversion trading strategy.

Traders that rely on history instead of luck should pass on this pattern in the forex and crypto markets due to a lack of daily data to determine statistically significant trading strategies.

Keep reading to learn the best thrusting pattern stock trading strategy.

What Are Thrusting Candlestick Patterns?

The thrusting pattern is a rare two-candle bearish continuation.

The name comes from the second candle thrusting into the prior candle without much penetration. You can think of a weapon that has to come back out of plate mail to remind yourself that it’s a bearish continuation.

Wielding this spear-like candlestick is dangerous in the wrong hands. Still, I’ve got a data-driven solution. But before we cover that, let’s learn how most thrusting pattern traders stab themselves in the foot.

How to Identify Thrusting Candlestick Patterns

A valid thrusting pattern requires the following:

• The first candle is bearish and large.
• The second candle is bullish, opens below the prior low, and closes into the prior real body below the midpoint.
• The thrusting pattern must occur during a downtrend.

Amazon’s daily chart on November 15th, 2018, shows a fantastic example of the thrusting candlestick pattern.

The price is in a considerable downtrend, below the fifty-day simple moving average. We see a large bearish candle followed by a bullish candle that opens below the prior low and closes a little lower than the real body’s midpoint, fulfilling the thrusting pattern requirements.

Now that we can identify the two-candle pattern, let’s learn the best thrusting pattern trading strategies.

How to Trade the Thrusting Candlestick Pattern

The thrusting pattern should be traded using a bullish mean reversion strategy in the stock expecting a sizable move according to the 21-year backtest.

Before we learn the optimal thrusting pattern trade setup, let’s learn how traditional traders cut their trading profits.

Thrusting Bearish Continuation Trade Setup

The price is downtrending as it’s below the fifty-day simple moving average. We see a large bearish candle followed by a bullish candle opening below the prior day’s low and closing within but no greater than the previous candle’s midpoint, fulfilling the thrusting pattern requirements.

Traditional traders go short at a break of the second candle’s low and place their stop loss above the first candle’s high. 

Uninformed traders shorting the Apple daily chart on January 4th, 2016, made money, but they’re going against the winds of history.

Thrusting Bullish Mean Reversion Trade Setup

The price is in a short-term bear market, below the fifty-day simple moving average. We’ve got a large red bearish candle followed by a bullish candle opening below the last candle’s low and closing just above the previous close, fulfilling the thrusting pattern requirements.

With the pattern identified, data-driven stock traders enter long when the price falls below and then back above the thrusting pattern low, placing a stop loss of one ATR.

We’ll use the Nvidia chart on April 11th, 2017, to get a crystal clear picture.

The pattern low occurred on the second day at $24.09. The price moved below this on the 13th, causing smart traders to be ready for an entry within the next three days. The price moved above this low the next day, triggering an entry with data-driven traders taking advantage of the new price trend and delivering substantial profits.

While discussing profits, what does history tell us about the best thrusting trading pattern?

Does the Thrusting Candlestick Pattern Work? (Backtest Results)

I backtested thrusting candlestick patterns on the daily timeframe in the crypto, forex, and stock markets using the following rules:

• A close above the 50-day SMA constitutes an uptrend.
• I tested risk-reward ranges from 1 to 5. 
• The optimal risk-reward ratio is selected using profit per bar.
• Entry and exits are discussed in the trading section above.
• Confirmation must occur within three days of the pattern signal.

Similar Candlestick Patterns

Traders confuse the thrusting pattern with other candlestick patterns.

In Neck vs. Thrusting Pattern

The in neck is a two-bar bearish continuation pattern that’s almost identical to the thrusting pattern. The only difference between the in neck and the thrusting pattern is that the in neck’s second candle closes just above the previous close, whereas the thrusting pattern closes closer to the midpoint. 

While sometimes it might be impossible to differentiate the in neck from the thrusting pattern, the good news is that they are both optimally traded using bullish mean reversion strategies. 

The Bottom Line

The thrusting pattern is a rare two-candle bullish continuation pattern that’s best traded in the stock market using mean reversion strategies. Forex and crypto traders should avoid this rare pattern because it is too infrequent to develop statistically significant trading strategies.

Data-driven traders will likely want to pass on this pattern for more frequent, high-probability bullish candlestick patterns.