A clocked stochastic second crest with a window-high stop

A complete reversal checklist

This archive article teaches a combination skill. Read a 14-bar close slow stochastic with three-bar smoothing as a classified second-crest pattern with a fixed countdown, then bind that reading to a window-high stop-loss.

Editorial interpretation: finish this checklist before a later divergence reading can appear. The archive facts describe only the historical workflow below.

The stochastic-oscillator locates the latest close inside the prior 14-bar high-low range rather than against the price 14 bars earlier. Pattern-recognition treats selected oscillator shapes as named sequences with thresholds, a second crest, and a timed completion rule rather than as informal divergence glances.

The oscillator and percent-k

The only oscillator form used is that 14-bar close slow stochastic with three-bar smoothing. Percent-k is the fastest stochastic line. It is the line used to test the upper-zone hold, the limited pullback, and the return that creates a second crest.

The method treats selected oscillator shapes as pattern-recognition objects. Price action is said to imprint momentum, so those shapes can be classified by form, frequency, and a defined forecast role.

Uptrend context and the two crests

A valid setup requires an established uptrend defined by both a trendline and a 40-period moving average. The intended short runs against that upswing.

The first crest requires percent-k to hold above the 70-75 zone for at least three bars, then ease to or below 75 without falling through 55. After a reading of 85 or higher, the same crest may instead ease only 10 to 15 points from that extreme.

The second-crest look requires percent-k to climb back into the 70-75 zone within five bars. After an extreme peak, the return may instead retrace at least 50 percent of the first decline.

The ten-bar-clock and the entry

The ten-bar-clock starts on the nearest price bar that first pulled percent-k down from the opening crest. A short is taken on the close of bar 10.

Elastic-weakness-entry applies when bar 10 is the window high. In that case entry waits for the first lower open or lower close inside the next three bars.

The window-high stop-loss

Unless bar 10 is itself the high, the stop-loss is the highest price printed during that 10-bar window.

When the sequence stalls near an extreme, the described risk rule prefers exiting before a new high rather than leaving the stop-loss at those highs. A break through the old high can produce large stop slippage.

Time-filtering across intervals

Time-filtering means checking the same oscillator sequence on more than one sampling interval so a shorter clock can lead a longer one.

Weekly instances are treated as usually dominant because they span more time and larger swings, but a fully formed daily instance can lead. A daily cocoa example completed five days before the weekly counterpart.

Pattern-failure after the timed entry

If resolution is not prompt after entry, at worst within 10 periods, the setup is treated as failed.

Pattern-failure is a stall after the timed entry in which the oscillator crosses back up, or price only ranges and is slow to break trend, average, or RSI support. Typical failure signs are an oscillator upswing crossover after the turn, or range-bound trade that is slow to impair trendline, moving-average, or RSI support.