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November 14, 2017
Bearish momentum came to a halt last Wednesday as the Bulls secured a Short Term Low for Sprint. This stock has been on a negative slide for months, and every bounce has been one to sell into. The outlook is different for this current turn in direction. A “Three Outside Up” Japanese Candlestick reversal pattern formed and was confirmed with Thursday’s positive follow-through move higher.
Trend analysis has this stock in a free fall. Stochastics have been trending in the Over Sold territory for a month. RSI Over Sold levels have also been indicating a potential turn for a while for “ S “ as well. At face value, there is no reason to try and catch a falling knife. The “Three Outside Up” pattern, however, sets a short-term Low, and this also is a high probable reversal signal. A breach of 6.43 should instigate fresh buying to press the new rally up to the 6.89 Resistance level. 7.27 is the extreme for a corrective move higher. Trading above this area takes all momentum away from the Bears. Wednesdays Low is the floor for Support. Only trading below here will put Sprint in a world of hurt as Bearish forces press new move Lows.
Having the “Three Outside Up” pattern increases the odds of trading against the Longer Term Downtrend. This, in conjunction with two indicators in the Over Sold area, has the Bulls set for more upside action. A 10% rise in the price of Sprint is likely which would send “ S “ into the upside target area. At current levels, this is not a major price move, and if it is more than a corrective bounce, then this recent high probable Japanese candlestick pattern could yield a big rally. Trading near the 8.00 level is very possible before the end of the year. Not a bad move to catch and the ROI is high since the time frame for this move is only a few weeks.
The source code to identify this trading signal uses TA-LIB. You can find it at https://app.cloudquant.com/#/strategies?script=TALIB.Three_Outside
Access to the source code requires CloudQuant registration.
Author: Theodore Kekstadt
The thoughts and opinions in this blog are those of the author and do not represent an investment recommendation by CloudQuant or Kershner Trading Group. CloudQuant provides Mr. Kekstadt’s posts solely to demonstrate High Probable Japenese Candlestick Patterns that can be used by crowd researchers in their efforts to develop algorithmic trading strategies.