Skip to main content
Track Pattern recognition
6 / 25
Search the archiveLibrary
Library

1993issue C081-10

RSI price pattern templates and open interest

A 14-period relative strength index marks overbought or oversold conditions, divergence, and distinct oscillator signatures across decline shapes. The reversal template is lower price lows against a rising support zone, a channel-contained oscillator spike, and a later pause after prices accelerate. Daily volume, open interest, and a paired 3-day and 5-day moving average check whether a familiar shape still has participation.

  • A 14-period relative strength index marks overbought or oversold conditions and divergence, and different decline shapes carry distinct oscillator signatures.
  • The reversal template is lower price lows that probe a rising support zone, a channel-contained oscillator spike used for timing, and a later post-acceleration consolidation.
  • Daily volume and open interest, with a paired 3-day and 5-day moving average, serve as participation checks that can veto look-alikes that never confirm.
  • Pattern-failure appears as weak, inside, or resistance-capped follow-through, so the exit is whether price remains inside the model rather than a fixed tick budget.
Entries in this reading3 entries
Current trackPattern recognition48 readingsOpen interest analysis118 readingsRelative Strength Index186 readings

Oscillator signatures in a decline

A 14-period relative strength index is applied to mark overbought or oversold conditions and divergence, and different decline shapes are described as carrying distinct oscillator signatures. Divergence is price printing lower lows while the oscillator trends higher and builds a rising support zone.

The reversal template

The reversal template is specified as lower price lows, a rising oscillator support zone that those lows probe, a channel-contained bounce that spikes the oscillator, and the first consolidation after prices accelerate. Pattern recognition matches repeating combinations of price-channel behavior and oscillator shape, including completed, incomplete, and failed templates.

The rising support zone is a gradually higher floor under the oscillator that successive price lows probe without breaking. The oscillator spike is a brief upward burst in the oscillator from a bounce that stays inside the existing down channel and is used for timing. Post-acceleration consolidation is the first pause after covering pressure lifts and price accelerates, treated as a later window rather than the initial template.

Bond windows

Treasury-bond chart windows show new price lows occurring while the oscillator trends higher, then an upward spike followed by the oscillator settling toward its rising support line. One bond sequence after a two-day oscillator spike traces a 21-day range, holds a retest of the low, and only later resumes after a subsequent consolidation.

Lumber windows

A lumber window with nearly flat closes and a rising oscillator produced a spike, then several apparent completions before a prior low near 195.60 was retested and held. A later lumber window is classified as an unrealized template because the oscillator did not form rising support, even though an upward spike still appeared and a long-horizon oscillator floor near 28 recurred.

Stops defined by the model

Daily ranges leading into the template are used to infer a stop just outside the formation, so the exit is defined by whether price remains inside the model rather than by a fixed tick budget alone.

Incomplete and failed templates

A gold sequence that looked complete after an oscillator spike and a shelf-like support pause then broke the template on a narrow inside day and a five-day shallow drift, and a later repeat of the same unfinished shape is treated as one larger pattern. A lumber sequence with a four-day oscillator spike never generated enough follow-through to clear a nearby 155 resistance band that held shorts and resting orders, and that weak acceleration is presented as a failure cue. Pattern-failure is weak, inside, or resistance-capped follow-through after a familiar template, so the setup is treated as incomplete.

Participation checks

Daily volume and open interest are named as participation checks on these templates, with a paired 3-day and 5-day moving average used as a near-term confirmation filter. Open interest analysis uses daily open interest, with volume, as a participation check on whether a price-and-oscillator template still has market commitment.

14-period RSI on December 1987 T-bonds

A 14-period RSI on December 1987 Treasury bonds holds a slowly rising support zone while price still prints lower lows. The mid-window upward spike is the in-channel bounce used to time the reversal; later probes of that rising RSI floor coincide with the last price lows before the turn. Values were read from the published oscillator pane, not from a numeric table.
A 14-period RSI on December 1987 Treasury bonds holds a slowly rising support zone while price still prints lower lows. The mid-window upward spike is the in-channel bounce used to time the reversal; later probes of that rising RSI floor coincide with the last price lows before the turn. Values were read from the published oscillator pane, not from a numeric table.December 1987 Treasury bonds · daily · 1987-09-08T00:00:00.000Z to 1987-11-02T00:00:00.000Z

Daily closes are not tabulated in the article. RSI points are approximate readings from the printed 0–100 pane; the price window discussed in the source is 8 September through 19 October 1987, with the oscillator spike dated 13 October.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
6 of 25 in the Pattern recognition track
19941-5 pp.Next on Pattern recognitionConstructing a dual-net day-ahead index direction forecastA pattern-recognition forecast maps a fixed lookback of ordered observations to a forecast label by adjusting connection strengths until the response is acceptably close to a chosen target, then applying that map to unseen inputs.
All readings on this track · 25 readings
  1. 1986Construct a decision procedure that revises itself
  2. 1989Finish the volume checklist before scoring the breakout
  3. 1989Constructing supervised forecasts on moving averages
  4. 1991Candlestick labels as stacked construction tests
  5. 1992Walk-forward evaluation of weekly price-change patterns
  6. 1993RSI price pattern templates and open interest
  7. 1994Constructing a dual-net day-ahead index direction forecast
  8. 1994A clocked stochastic second crest with a window-high stop
  9. 1996Volatility-ratio, inside-day and narrow-range-4 entry construction
  10. 1998Sliding-window correlation for cup-and-handle construction
  11. 2000Constructing rectangles for breakout hypotheses
  12. 2001Turning one candle into a ranked numeric object
  13. 2002Fuzzy-scored chart patterns as testable rules
  14. 2002From hot-zones to an open-close-matrix
  15. 2003Volume pressure and a band-clearing breakout case
  16. 2004Evaluating chart patterns against price objectives
  17. 2004Cobweb turning points from price structure
  18. 2005Hybrid decision trees and pattern recognition for trend rules
  19. 2005Two-bar zone codes for testable pattern systems
  20. 2005Price bar pattern construction and next-bar frequency
  21. 2008Observe markets before following pattern or system rules
  22. 2012Treat a four-leg Fibonacci completion as an unpaid hypothesis
  23. 2014Hidden three-channel regression signals for stock and call option entries
  24. 2014A shared daily-chart-level framework for session trades and swing holds
  25. 2015Condensed candlestick signatures
By fieldIndicators and filters682 readingsBy year199376 readings
All 48 readings tagged Pattern recognition
Also on Pattern recognition5 readings
2012Treat a four-leg Fibonacci completion as an unpaid hypothesis1986Construct a decision procedure that revises itself1989Auditing price motifs against binomial chance1989Constructing supervised forecasts on moving averages1989Finish the volume checklist before scoring the breakout