Very Interesting Pattern...


Junior member
There is a pattern that may not have a name but if you look at enough charts
you will see a very interesting thing that does occur. On the 3rd, 5th or 8th
day a stock will generally reverse course! What? That's right. Suppose a
stock is falling. Very often the stock will halt its slide or even rebound on
the third day. Now if it doesn't hold up on that third day watch for the
falling to stop on the 5th day and then again on the 8th day.
Not much has written about this phenomenon, but after watching charts for all
these years it has come through very clearly. Likewise it's often the same
case with a stock that has been moving higher. It will pause on the 3rd, 5th
and 8th day, but interestingly the effect isn't as strong as on ones that are
falling. In other words, when a stock is falling, the 3,5,8 day reversal is
often very strong but on a rising stock the effect is more like a pause than
a reversal to the downside.
Many times when you see a stock listed, it is one that is coming up on either
a 3,5 or 8 day fall and we say something like "this one looks ready to
reverse and head higher". Astoundingly quite a few of them (over 80%) usually
make a one day reversal pop. So, along with other indicators, take the time
to look for stocks that are coming up on that 3,5 or 8 day area and watch to
see if the theory holds true.
Some charting programs actually let you filter for things such as this, as
you can input parameters like "stocks down 2 days" or "stocks down 4 days".
This way you can get a sampling of who is in that situation and watch to see
if the reversal comes through for you.
you can see it often in a 5 min futures chart on a long steady decline: a sudden pop. Why?
Because the shorters are making loadsamoney and those in early will start thinking about profittaking. Once they start , those who shorted late will get squeezed and close.. and the price will rise further until those who closed near the bottom will start shorting again.. using fib numbers..

Self fulfilling systems...