V.7:8 (241-242): Tradable price patterns by Kent Calhoun

Tradeable price patterns by Kent Calhoun

What if you knew tomorrow had an 85% probability of closing higher. Do you think it w w would be possible to find a way to make money? Such patterns do exist in the markets all the time, but go unnoticed because traders do not know how to find them. You can estimate the probabilities associated with any particular pattern of daily closes. Use a computer with your current data or manually tabulate closing prices from, say, The Wall Street Journal or Investor's Daily.

First, Monday's close is always assigned a value of X whether it is up or down from Friday's close. For each day that loses in the same direction as the Friday-to-Monday close, an X is used. For each close in the opposite direction record an O. Thus, if Friday-to-Monday was up, Monday-to-Tuesday is up, and Tuesday-to-Wednesday is down, your pattern will look like:

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