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Slider Tutorial: Consecutive Closes…

Consecutive Higher/Lower Closes

As of 04/27/2020

  Indus: 24,134 +358.51 +1.5%  

  Trans: 8,317 +225.02 +2.8%  

  Utils: 806 +10.71 +1.3%  

  Nasdaq: 8,730 +95.64 +1.1%  

  S&P 500: 2,878 +41.74 +1.5%  

YTD

-15.4%  

-23.7%  

-8.3%  

-2.7%  

-10.9%  

  Up arrow26,200 or 21,500 by 05/01/2020
  Up arrow9,250 or 7,500 by 05/01/2020
  Up arrow890 or 725 by 05/01/2020
  Up arrow8,800 or 7,450 by 05/01/2020
  Up arrow3,000 or 2,500 by 05/01/2020

As of 04/27/2020

  Indus: 24,134 +358.51 +1.5%  

  Trans: 8,317 +225.02 +2.8%  

  Utils: 806 +10.71 +1.3%  

  Nasdaq: 8,730 +95.64 +1.1%  

  S&P 500: 2,878 +41.74 +1.5%  

YTD

-15.4%  

-23.7%  

-8.3%  

-2.7%  

-10.9%  

  Up arrow26,200 or 21,500 by 05/01/2020
  Up arrow9,250 or 7,500 by 05/01/2020
  Up arrow890 or 725 by 05/01/2020
  Up arrow8,800 or 7,450 by 05/01/2020
  Up arrow3,000 or 2,500 by 05/01/2020

 

Released 3/18/2020.

Consecutive Closes: Tutorial

Below is a slider quiz/tutorial to test your knowledge of consecutive higher or lower closes leading to a chart pattern breakout. Captions appear below the pictures in red for guidance, so be sure to scroll down far enough to read them. For more information on these findings, click: this link.

 

1 / 6

chart pattern

Imagine you’re considering buying the symmetrical triangle chart pattern shown here, outlined with two converging straight lines. Price leading to the
upward breakout (A) closes higher four days in a row. I show that in the inset (B) with four red dots. Do four consecutive up closes mean price is more likely to
throwback? By that, I mean the move from A to C, where the stock returns to the breakout price shortly after the breakout. The next slide provides the answer.

2 / 6

chart pattern

Is a throwback more likely? No. In fact, consecutively higher closes leading to the breakout are a good indicator that a retrace will not occur. Does the same trend apply to
downward breakouts? Yes. More than three consecutive lower closes leading to a downward breakout means a pullback is less likely. What about performance? See the next slide.

3 / 6

chart pattern

Given the same situation, is the move from A to C shorter than it is otherwise? To put it another way, does performance suffer after 3 consecutive higher or lower
closes leading to a breakout? The next slide provides the answer.

4 / 6

chart pattern

Does performance suffer? No. Post-breakout performance is better if price closes higher/lower consecutively more than 3 days leading to the breakout, especially if the
breakout is downward (that is, expect a larger decline after 3 consecutive lower closes). What about failures? See the next slide.

5 / 6

chart pattern

Given the same setup, does price fail more often than normal? That is, instead of continuing upward, price drops like that shown from A to C. The next slide provides the answer.

6 / 6

chart pattern

Do failures occur more often if price closes consecutively higher/lower more than 3 days leading to the breakout? No. Failures occur half as often for upward breakouts,
but only see a slight improvement after downward breakouts. For more information on these findings, click: this link.


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