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Here are the results of a study I did regarding price retracements. It
takes into account 2320 stocks, which were selected from the universe of all
stocks with the following criteria: 50 day average volume above 100,000
shares and price above $10. Every stock was searched for a specific pattern
during the 1-year period mid Oct 1999 to mid Oct 2000.
The pattern searched was a simple swing up followed be a retracement meeting
a specific target as described below. Following the retracement is another
swing up to at least the high established with the initial swing up. Data
used was daily data from TC2000 and all calculations were done using
intraday highs and lows.
There are 7 retracement levels that were searched. These levels are 38%,
42%, 46%, 50%, 54%, 58%, 62%. For each level there is a 1% margin of error.
Using 50% as an example, this means the stock retraced anywhere between 49%
to 51% of the prior swing up.
The numbers below indicate the number of patterns that were found for each
level of retracement. For example, out of the 2300 stocks there were 223
patterns found that retraced 46% of the prior swing up before moving on to
recovery highs.
38% 186
42% 211
46% 223
50% 259
54% 248
58% 241
62% 256
Profitable trading,
Ed Kasanjian
www.kasanjianresearch.com
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