As of 09/06/2024   Indus: 40,345 -410.34 -1.0%     Trans: 15,427 -190.44 -1.2%     Utils: 1,029 -7.87 -0.8%     Nasdaq: 16,691 -436.83 -2.6%     S&P 500: 5,408 -94.99 -1.7% YTD  +7.0%   -3.0%    +16.7%    +11.2%    +13.4% Overview: 08/14/2024     42,000 or 39,500 by 09/15/2024   16,200 or 15,300 by 09/15/2024   1,100 or 1,000 by 09/15/2024   18,400 or 16,650 by 09/15/2024   5,750 or 5,375 by 09/15/2024
 As of 09/06/2024   Indus: 40,345 -410.34 -1.0%     Trans: 15,427 -190.44 -1.2%     Utils: 1,029 -7.87 -0.8%     Nasdaq: 16,691 -436.83 -2.6%     S&P 500: 5,408 -94.99 -1.7% YTD  +7.0%   -3.0%    +16.7%    +11.2%    +13.4% Overview: 08/14/2024     42,000 or 39,500 by 09/15/2024   16,200 or 15,300 by 09/15/2024   1,100 or 1,000 by 09/15/2024   18,400 or 16,650 by 09/15/2024   5,750 or 5,375 by 09/15/2024

Bulkowski on Consecutive Higher/Lower Closes

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
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
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
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
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
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
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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