Predicting Stock Price Trend Using Candlestick Chart Blending Technique

The paper deals with a technical analysis for stock price predictions using candlestick charts. The stock prices are apt to show no directional movements when there is no significant news, resulting in generating a series of noisy candlesticks. We propose a blending algorithm that combines candlesticks sharing certain price ranges into one candlestick to eliminate the noisy candlesticks. The paper discusses statistical measures on candlesticks to produce appropriate blended candlestick charts for the prediction. The experimental results on the Nikkei-225 stock average show that the blended candlesticks are successful in offering information for short-term stock price predictions. The performance of the proposed algorithm is measured showing that it can blend daily candlesticks of 25 years within two seconds.