Whiplashes are usually tightly defined - a whiplash long signal would be given by a gap down at the open below the previous low, then a strong rally through the day to give a close higher than the open and above the 50% point of the day's range. The signal works well in reverse for shorts.
According to Raschke & Connors (in 'Street Smarts') etc. this can be a strong reversal signal as the day's contrary price action is often continued over the following several days. But it is possible to see weaker forms of the whiplash: seeking long signals only, these conveniently print on candlestick charts like Sharescope as having hollow red bodies, showing they had higher closes than opens but price was down on the previous close. Sometimes these form other candlestick patterns like inverted hammers.
It is striking to note how many good upward swing moves start from a weak whiplash. The first useful feature is that, unlike a day which opens on the high and closes on the low, price action through the signal day telegraphs the subsequent days' action. Either may be followed by a bullish reversal but the whiplash day sends a signal this is imminent.
The second nice thing about these patterns may be more important - it is that they sometimes mark a very significant reversal point, taking price into double digits of % gain. I don't mind a marginal entry signal if it brings me a regular crop of outperforming winners and alows a tight stop on the losers.
I will be tracking these patterns and occasionally put stuff here. Feel free to throw in your own.
According to Raschke & Connors (in 'Street Smarts') etc. this can be a strong reversal signal as the day's contrary price action is often continued over the following several days. But it is possible to see weaker forms of the whiplash: seeking long signals only, these conveniently print on candlestick charts like Sharescope as having hollow red bodies, showing they had higher closes than opens but price was down on the previous close. Sometimes these form other candlestick patterns like inverted hammers.
It is striking to note how many good upward swing moves start from a weak whiplash. The first useful feature is that, unlike a day which opens on the high and closes on the low, price action through the signal day telegraphs the subsequent days' action. Either may be followed by a bullish reversal but the whiplash day sends a signal this is imminent.
The second nice thing about these patterns may be more important - it is that they sometimes mark a very significant reversal point, taking price into double digits of % gain. I don't mind a marginal entry signal if it brings me a regular crop of outperforming winners and alows a tight stop on the losers.
I will be tracking these patterns and occasionally put stuff here. Feel free to throw in your own.
