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2005issue C091

Two-session moving-average pullback short

A declining-market screen, a thirty-five-session average pullback, liquidity floors, a next-session break of the prior low, and a prior-session stochastic gate are stated as separate conditions. The archive joins yesterday's setup, today's downside break, and that gate into one procedure.

  • A downtrend-screen treats the highest close over five sessions remaining below the lowest close from a twenty-session window offset by twenty sessions as the required market state.
  • The setup references a thirty-five-session simple moving average of the close, requires that none of the prior fifteen sessions closed above it, and requires the close to sit within 1.0 percent of that average.
  • The same setup applies a volume reading above 2000, annotated as at least 200,000 shares, and a close above 15.
  • The entry is sequenced across two sessions, and a prior-session stochastic reading below 80 must pass before the joined procedure can issue a short signal.
Entries in this reading3 entries
Current trackStochastic oscillator170 readingsRule-based entry174 readingsMoving average449 readings

How the short is assembled

This construction records a short only after several stated conditions have been met in order. The first group of conditions marks a completed setup. A later session must then break the prior session's low, and a stochastic-oscillator reading from the prior session must also allow the signal.

The moving-average is a simple average of closes over a fixed lookback that marks where price has pulled back close enough to count as a setup. The rule-based-entry is a two-session procedure that first marks a completed setup and then requires a later downside break before a short signal is issued. The stochastic-oscillator is a bounded reading of recent price location used here as a prior-session veto rather than as a standalone forecast.

The required declining state

The downtrend-screen is a comparison of a short-window high close against an older, offset low-close window to restrict setups to issues that are still declining. The archive treats the highest close over five sessions remaining below the lowest close from a twenty-session window offset by twenty sessions as the required market state.

Average location and closeness

The pullback reference is a thirty-five-session simple moving average of the close. A setup requires that none of the prior fifteen sessions closed above that thirty-five-session average.

The same setup requires the close to sit within 1.0 percent of that average. Average-proximity is the closeness test that treats a close within a stated percentage of the reference average as a pullback.

Liquidity floors

The setup also applies a volume reading above 2000, annotated as at least 200,000 shares, and a close above 15. The volume-and-price-screen applies those minimum activity and price floors so the remaining rules are only evaluated on more liquid names.

A later downside break

The entry is sequenced across two sessions. The moving-average pullback setup must have been true on the prior session, and the current low must break the prior session's low.

That setup-trigger-split is a construction that records the pullback condition on one session and withholds the entry until a later session breaks the prior low.

The oscillator veto

A stochastic gate allows the combined signal only when the prior session's stochastic reading is below 80. In this workflow the stochastic-oscillator is not used as a standalone forecast.

One joined procedure

The backtestable composite joins yesterday's setup, today's break of yesterday's low, and the stochastic gate into one procedure.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
26 of 42 in the Stochastic oscillator track
20061-3 pp.Next on Stochastic oscillatorMarket condition as a permission layer for moving averages and oscillatorsMarket condition is identified first, because the prevailing regime, not the strategy, is said to decide which tools fit.
All readings on this track · 42 readings
  1. 1987Stochastic fast and slow construction as a rebuildable stack
  2. 1989Building the stochastic oscillator from close location
  3. 1990Monthly stochastics as a multi-year bond regime filter
  4. 1990Walk-forward screen for yen indicator rules
  5. 1990Slow stochastic construction for index pullback entries
  6. 1991Random Walk Index construction with an adaptive lookback
  7. 1991Building a two-stage stochastic oscillator from close location
  8. 1992Constructing fast and slow stochastic oscillator lines
  9. 1992Constructing nested stochastic lookbacks
  10. 1994Construct the four-state price-volume rank before filtering it
  11. 1996Crowded stochastics, false breakouts, and hidden stops
  12. 1997Fade and follow entries from stochastic extremes
  13. 1998Oversold confirmation as a staged rule-based-entry case
  14. 1999Constructing regular and slow stochastic oscillators
  15. 2001Construct a variable-interval simple moving average from stacked extremes
  16. 2001Threshold RSI and stochastic setups with next-bar stops
  17. 2001Two tests of a rate-adjusted earnings-yield gap
  18. 2002Constructing a two-line stochastic from a range-normalized close
  19. 2002Inspect mechanical stochastic daytrade rules on one bar
  20. 2003Constructing an adaptive stochastic RSI
  21. 2003Four parameters that construct a stochastic oscillator
  22. 2004Volume breakout as signal, pullback as entry
  23. 2004A first currency-market checklist with two averages and a slow stochastic
  24. 2005Shared-scale cycle indexes with companion oscillators
  25. 2005Current-bar versus prior-bar range construction for the stochastic oscillator
  26. 2005Two-session moving-average pullback short
  27. 2006Market condition as a permission layer for moving averages and oscillators
  28. 2008Lock the stop at support before sizing a stochastic entry
  29. 2010Construct a center-line volume oscillator and read it with a stochastic oscillator
  30. 2010Sharpened RSI turns with rainbow averages and a slow stochastic
  31. 2011Build a Spearman rank oscillator from ordered closes
  32. 2012Gold as a regime-dependent hedge in the euro-area crisis
  33. 2012Pairing moving averages with variable-length stochastics
  34. 2014Two-leg stochastic stress oscillator as a rebuild drill
  35. 2014Ingress dates as price bases for relative strength, stochastics, and moving averages
  36. 2017Constructing a dual EMA stochastic from range normalization
  37. 2018Constructing a two-stage stochastic RSI for comparable price-oscillator divergences
  38. 2018Combining a weekly stochastic, a long moving average, and two-day resistance
  39. 2018Weekly and daily stochastic readings with a long moving average and support
  40. 2018A confirming workflow for rotating from discretionary to staples
  41. 2019Stochastic scan thresholds, averages, and formula syntax
  42. 2020Constructing Slow %K as a two-stage helper
By fieldEntry and exit rules206 readingsBy year2005104 readings
All 170 readings tagged Stochastic oscillator
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