- : December 23, 2020
- : Prashant Shah
Have a look at below image.
I am looking for the pattern where stock is in a tight consolidation mode, but overall trend is strong and bullish.
We can refer to stocks trading above moving average and look at overall chart pattern to find out such stocks. Below is a chart showing this pattern using couple of indicators and trend lines.
Three tools are used in the above chart:
45-degree trend lines plotted from important top (A) and bottom (B) indicate that the stock is in a consolidation mode.
Price was trading above all three moving averages, and now they are in a khichadi mode. Interestingly, all three averages are within the current column. Meaning, 10, 15 and 20 period average price of swings is within the current column range.
Current price pattern is a 3-column triangle (pattern of convergence, swing within swing move).
- 45-degree trend lines
- XO Zone
- Triple Moving Average
The stock is bullish if price maintains recent bottom.
Below is a chart of BRITANNIA.
- coumn XO zone is clearly bullish and remained in the green zone even during the correction. Meaning, bullish prints are more than bearish prints over last 20 columns.
OOPS pattern was explained in detail in the last newsletter. This way, we can find stocks trading at important support and resistance levels. How did I find this instrument? I scanned for OOPS pattern.
How to scan OOPS pattern?
I want to look for this pattern on any of the important box-value.
- Bullish OOPS pattern in 0.25% chart.
- – ‘O’s at same level in 1% box-value chart near previous peak. Pricing taking support at previous resistance is known as a principle of polarity.
Go to Matrix -> P&F System Matrix
Select OOPS Bullish Support pattern condition in all box-values.
Select the group of stocks and scan.
In the output section, the score will be 1 if pattern is qualified on that box-value. Sort the total score column and look for candidates having score of 1 and above. Ignore the remark column.
Now you have list of stocks qualifying for the pattern on any of the chosen box-values. You can save them in a group and run other systems such as Relative strength or Matrix on that group.
Now we can open the charts qualified for the pattern and look for other patterns in different box-values.
‘O’ at same level followed by positive column reversal is a part of bullish OOPS pattern. But ‘O’ at same level on higher box-value is an important observation, it tells us that price is trading near important support level. What if I also want to consider that pattern for higher box-value in scanner itself?
Go to Back-testing -> System Builder -> P&F charts
- ‘O’ at same level and
- OOPS bullish support pattern
Write in Expression: 1 or 2.
Save the system builder and go to P&F System matrix.
Select ‘OOPS or O’ system on higher box-values.
Look for stocks having score 1 and above. Understood? Vice versa for bearish stocks.
How about combining other patterns in the P&F system matrix in this way? There are many possibilities, think and explore.
These tools are unique and interesting having great potential. Sincere approach and creativity can make you benefit tremendously by using them.
If you need help to set those scanners or understand them more, our support team is more than happy to talk to you.