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1997issue C111-6

Weekly reversal as a three-part hypothesis

A weekly reversal is an outside week that closes beyond the prior week's range and against the prevailing trend. The historical workflow then mapped a nearby support or resistance target and used the relative-strength-index as a second check.

  • A weekly reversal is an outside week whose close sits beyond the prior week's range and against the prevailing trend.
  • An upside reversal appears in a decline and closes above the prior week's range; a downside reversal appears in a rally and closes below it.
  • Across 573 reversals in 214 of 287 stocks, 443 cases, or 77%, correctly predicted a trend reversal, while high volume appeared in only 22% of reversals and did not systematically mark larger subsequent price moves.
  • One case study used relative-strength-index divergence at a peak, with 85% of such top divergences associated with a measurable later decline, and mapped a target where support, a 40% retrace, and a 75-day average coincided.
Entries in this reading3 entries
Current trackCandlestick patterns100 readingsSupport and resistance170 readingsRelative Strength Index186 readings

What counts as a weekly reversal

A weekly reversal is an outside week whose close sits beyond the prior week's range and against the prevailing trend. An outside week is a weekly bar with a higher high and a lower low than the prior week.

An upside reversal requires a downtrend plus a close above the prior week's range. A downside reversal requires an uptrend plus a close below that range. The same rule can be stated as an upside reversal that appears in a decline, or a downside reversal that appears in a rally.

What the historical count showed

Across 573 reversals in 214 of 287 stocks, 443 cases, or 77%, correctly predicted a trend reversal. Correct upside reversals outnumbered downside reversals, 261 versus 182, and lasted longer on average, 70 days versus 48 days.

High volume appeared in only 22% of reversals, and volume did not systematically mark larger subsequent price moves.

A mapped target and a second check

Support and resistance are nearby price zones used to estimate where a post-reversal move may stall. Support, a 40% retrace, and a 75-day average can coincide at one price, offering a mapped target rather than an open-ended reversal call.

The relative-strength-index is a bounded oscillator used as a second check, especially when price and the indicator diverge. One case study used relative-strength-index divergence at a peak, with 85% of such top divergences associated with a measurable later decline.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
10 of 54 in the Candlestick patterns track
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All readings on this track · 54 readings
  1. 1990Constructing three-session rally and reaction volume signals
  2. 1991Constructing candlestick real bodies and multi-session patterns
  3. 1991Treat a candlestick reversal as incomplete until %D confirms it
  4. 1991Filtering candlestick signals with stochastic percent-D
  5. 1991Constructing compressed candlestick summaries
  6. 1993Intraday candlestick confirmation with oscillators
  7. 1993Candlestick hypotheses from a 1993 reading list
  8. 1994License candlestick signals with oscillators and weekly vetoes
  9. 1995Real-body support, resistance, and close-through breakouts
  10. 1997Weekly reversal as a three-part hypothesis
  11. 1998Turning fear levels into testable rules with a psychological matrix
  12. 2000Evaluating three-bar reversal reliability
  13. 2000Prior-day candles, open confirmation, and same-session stops
  14. 2000Intraday candlestick volume confirmation for daytrading
  15. 2001Count the key reversal up before coding a mechanical exit
  16. 2001Rising and falling three continuation candle construction
  17. 2002Treat a moving average as a contested fence
  18. 2003Candlestick signals need support and a risk-reward screen
  19. 2003Constructing one-day reversal tops and bottoms
  20. 2003Chart sentiment as a regime filter for hourly stochastic entries
  21. 2004Confirming index reversals with candlesticks, stochastics and averages
  22. 2004The harami inner close as a reversal barometer
  23. 2004Constructing a true-range volume power-shift filter
  24. 2005Weighing reversal clusters against moving-average support
  25. 2005Candlestick exits confirmed by overbought stochastics
  26. 2005Confirming piercing patterns with stochastics and moving averages
  27. 2006Candlestick cluster exits confirmed by overbought stochastics
  28. 2007Three black crows become a trade hypothesis only after regime, trend and nearby levels
  29. 2008Asymmetrical RSI lookbacks for divergence and candle confirmation
  30. 2008A permission checklist for the end of a trend
  31. 2010Mechanical entries still need confirmation gates
  32. 2010Crude oil as a case study in candlestick session reading
  33. 2010Gold weekly candles and the thousand resistance breakout
  34. 2010A three-layer gold chart drill from waves to candle confirmation
  35. 2011Why entry scans fail without trend filters
  36. 2011Price-zone oscillator trend-regime rules
  37. 2011A candlestick checklist before commodity entries
  38. 2013Step candle construction at price turning points
  39. 2013Two-bar step-candle construction
  40. 2014Small-range bars as a timed volume-climax hypothesis
  41. 2014Constructing volume-scaled candlestick charts
  42. 2015Weekly range midpoints as support and resistance
  43. 2015Constructing weekly body-midpoint pattern codes
  44. 2015Evaluating encoded candlestick sequence hypotheses
  45. 2015Constructing a breakout relative-strength index from two-day range candles
  46. 2016A three-gate classroom on hourly sterling
  47. 2016Fibonacci retracement as a pre-commitment stop map
  48. 2017Nine-zone filter for decade-level breakouts
  49. 2017Constructing pin-bar and inside-bar setups
  50. 2017Two-bar soldier and crow rules become a system only after filters and exits
  51. 2017Confirm a one-white-soldier or one-black-crow before entry
  52. 2018Session control from marubozu and engulfing geometry
  53. 2019Volume, acceleration, and candle filters on a completed double bottom
  54. 2019Sector-filtered candlestick scans and predrawn stops
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All 100 readings tagged Candlestick patterns
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