Eight-bar pause reclaim entry and a stop-target grid

A three-layer contract

Editorial view: teach this continuation idea as a three-layer contract rather than as a single candle. The first layer is an engulfing-style reclaim after a measured pause. The second is an increment-entry on the next bar that can be refused. The third is a stop-target-grid that turns every exit choice into a comparable experiment.

The archive facts describe only the historical workflow. They do not rank the layers or recommend a live setting.

How the eight-bar-pause is defined

The eight-bar-pause is an eight-session sequence in which a recent extreme is followed by a brief counter-move before a reclaim.

A long setup is defined on eight consecutive bars in which the first bar prints a 60-day high and that high is also the highest high among the next six bars. That first-bar high is the sixty-day-extreme: it exceeds the prior 59 sessions and remains the extreme of the first seven bars.

The same long setup also requires a measured-pullback: at least a 3 percent decline from the first bar’s high to the sixth bar’s low, and that sixth bar must be the lowest of the first seven bars. The short setup inverts those four conditions.

The reclaim-bar is the seventh bar, treated as an engulfing-style continuation condition. On a long setup it must take out the sixth bar’s high. On a short setup it must take out the sixth bar’s low.

An increment-entry that can be refused

The increment-entry is a next-session stop placed just beyond the reclaim-bar so the trade is taken only if price confirms. For a long setup, the entry is a buy-stop on the eighth bar at the seventh bar’s high plus a small increment.

If the eighth bar never reaches that stop, the procedure abstains. Editorial view: refusal is part of the rule, not a missed trade.

Candle color is not a required filter, though two higher-close bars immediately before the entry bar were described as a possible strengthening condition for the signal.

What the historical scan covered

The historical sample covered 171 actively traded listed shares and 67 exchange-traded funds after dropping duplicate listings and any series with fewer than four years of history, using prices from 2006 through 2017 or from inception if shorter.

The scan produced 3,522 share setups and 1,134 fund setups, or 4,656 trades in total, of which 2,715 were long and 1,941 were short. Frequency differed by instrument type, with about 20.5 setups per share versus 16.9 per fund, so the combined averages are weighted toward the share sleeve.

How the stop-target-grid is used

The evaluation ran every pairing of 1 percent, 2 percent, 5 percent, and 10 percent stop-loss and objective distances, 16 combinations in all, and also tested an exit at the same session’s close, coded as a zero stop and zero target.

The same-session-close-exit is a theoretical exit at that day’s closing price, recorded in the grid as a zero stop and zero target. Editorial view: the grid is there so each risk bound can be compared without rewriting the entry rule.

Long and short counts

Long and short outcomes were reported separately and as weighted averages across shares and funds. The relative count of long versus short setups was proposed as a coarse reading of the broader market phase.