My Favorite Scan - WRBs

PristineTrading

Junior member
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The right Stock Scanner can be a great opportunity finder. Pristine ESP is one of the best there is. While it comes preloaded with the scans to find the patterns taught in our courses, you can easily create your own. Two of my favorite scans are the Bullish and Bearish Wide Range Bar (WRB). These can find stocks that are starting or ending a move and I found some interesting WRBs this weekend.

Before we look at a few charts let’s be clear that a scanner is only a starting point to your analysis; it’s a tool. As I mentioned in the prior Chart of the Week about the Hangman candle, without an understanding of trend analysis, multiple time frames and the location of these patterns those candlestick patterns can be meaningless and even misleading as a suggested reversal. It’s also wise to use some form of confirmation to any pattern. This is the same with WRBs.

The WRB scan looks for candles that are relatively wide compared to the recent candles of that stock. Meaning, it’s not based on the candles range being greater than a certain price amount. So a five-dollar stock could have a WRB that is .75 cents and a 40-dollar stock a two-dollar range from low to high. We also want the opening a closing prices near the extreme opposite end of the range. In other words, a relatively large green candle (a close above the open) compared to the prior candles or relatively large red candle (a close below the open) compared to the prior candles. Let’s look at a few different WRBs within their price patterns.

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Zillow made a top in during the summer and had been trending lower until mid-October when it started to base sideways. In early November Zillow gapped lower, but quickly reversed and rallied back into the top of the base. This shakeout pattern has the effect of removing overhead supply as some of those that bought within the previous part of the consolidation will get stopped out of their long positions. On Friday, Zillow open slightly higher from a bearish candle Thursday and rallied throughout the day to form a +WRB. This type of +WRB historically is the start of a new upward move referred to as an igniting candle. Note volume increase on the gap down shakeout and also on Fridays +WRB.

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Intralink Holdgs – IL also formed a +WRB on Friday, this type of +WRB that comes after a multiple bar up move historically signals a short-term end of that upward move. This is not to mean that IL cannot move higher; however, the odds of a resting period have increased. High volume on that +WRB also suggests that this +WRB is signaling the end of the rally short-term. The type of +WRB that ignites a move can be seen coming out the bottom of the base in late October that was followed by a Pristine 1234 continuation buy setup.

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Celgene – CELG formed a –WRB on Friday that was accompanied by high-volume as it broke below the bottom of its recent base. While this is a short-term bearish pattern CELG is still an uptrend. This same pattern of a -WRB occurred while prices would basing after a downtrend, it would be a very bearish signal indicating lower prices. Because CELG is an uptrend, the possibility of this –WRB breakdown becoming a shakeout is in something that’s out of the question. Combining a specific event within its trend in multiple time frames is essential to determining which events have the highest odds of following through as suggested.

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Pandora Media – P ended Friday with a +WRB that was accompanied with extremely high volume. While this +WRB is also the type of +WRB that is an igniting bar, it’s not the same as the Zillow igniting bar. Looking at the two chart examples, Zillow has a clearly defined textbook type of consolidation and a void of any significant price resistance to the left. Pandora on the other hand has an unfilled gap and a price pivot high light above current prices. This pointing to the first all point in hurdle that Pandora will need to overcome immediately.

As you can see from the four examples, a scan can produce very different charts with the potential for different outcomes based on further analysis. That being said, a stock scanner can decrease your time looking for opportunities aligned with your trade setups significantly. Once you have an interest list you must have a plan for trading that list that includes money and position management guidelines. Without that those odds of success are low.

All the best,



Greg Capra
President & CEO
Pristine Capital Holdings, Inc.
Pristine.com Trading
 
 
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