Hi Bob,
I like to use the candlesticks looking for primary reversal patterns. One of these very strong reversal patterns is the "Upside-Gap Two Crows".
According to Nison, the rationale for the bearish aspect of this pattern is as follows:
The stock is in an uptrend & opens higher on an opening gap. The new highs fail to hold & a black candlestick is formed. But the bulls can take some succor, at least, because the close on this black candlestick session still closes above the prior days close. The third session paints a more bearish portrait with another new high & another failure to hold these highs into the close. More negative, however, is that this session closes under the prior days close. If the next day, (that is the 4th session) prices fail to regain high ground, then expect lower prices.
Here is an simple and I am sure "elementary" scan I wrote to find this pattern. If you run this scan before Mondays update you should get 8 hits that would have been fairly good short candidates on the open 7/21/98 (day -10 is 7/17)
Input="???.lst";
Output="Upside-Gap 2 Crows.lst";
If AvgVol(-8,-37) >= 100000 and // And 100,000 shares average volume
Close(-10)>Open(-10) and // White Candle
Open(-9)>Close(-10) and //Opens higher than prior days close
Close(-9)>Close(-10) and
Close(-9)<Open(-9) and //Black Candle
Open(-8)>Open(-9) and //Open higher than prior days Black Candle
Close(-8)<Close(-9) then //Closes below prior days Black Candle
println symbol,",",description;
endif;
The days on this next scan has been changed to those necessary to run it on a daily basis.
Input="???.lst";
Output="Upside-Gap 2 Crows.lst";
If AvgVol(0,-29) >= 100000 and // And 100,000 shares average volume
Close(-2)>Open(-2) and // White Candle
Open(-1)>Close(-2) and //Opens higher than prior days close
Close(-1)>Close(-2) and
Close(-1)<Open(-1) and //Black Candle
Open(0)>Open(-1) and //Open higher than prior days Black Candle
Close(0)<Close(-1) then //Closes below prior days Black Candle
println symbol,",",description;
endif;
Any recommendations for refining this are welcome as I am an amateur. One would be to insure there was at least a short uptrend leading up to "Close(-2)>Open(-2)".
Monty |
