Bulkowski's Blog: ThePatternSite.com
As of 10/11/2019
  Indus: 26,817 +319.92 +1.2%  
  Trans: 10,292 +224.65 +2.2%  
  Utils: 867 -5.54 -0.6%  
  Nasdaq: 8,057 +106.26 +1.3%  
  S&P 500: 2,970 +32.14 +1.1%  
YTD
 +15.0%  
 +12.2%  
 +21.6%  
 +21.4%  
 +18.5%  
  Targets    Overview: 09/30/2019  
  Up arrow27,600 or 25,600 by 10/15/2019
  Up arrow11,100 or 9,700 by 10/15/2019
  Up arrow900 or 850 by 10/15/2019
  Up arrow8,300 or 7,700 by 10/15/2019
  Down arrow2,825 or 3,050 by 10/15/2019
As of 10/11/2019
  Indus: 26,817 +319.92 +1.2%  
  Trans: 10,292 +224.65 +2.2%  
  Utils: 867 -5.54 -0.6%  
  Nasdaq: 8,057 +106.26 +1.3%  
  S&P 500: 2,970 +32.14 +1.1%  
YTD
 +15.0%  
 +12.2%  
 +21.6%  
 +21.4%  
 +18.5%  
  Targets    Overview: 09/30/2019  
  Up arrow27,600 or 25,600 by 10/15/2019
  Up arrow11,100 or 9,700 by 10/15/2019
  Up arrow900 or 850 by 10/15/2019
  Up arrow8,300 or 7,700 by 10/15/2019
  Down arrow2,825 or 3,050 by 10/15/2019

 

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Monday 10/14/19. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

The chart of the Dow transports is on the weekly scale, not the daily. I wanted to show the longer-term trend.

I drew two red trendlines, one along the peaks and one along the valleys.

Notice how the index stays between those two lines most of the time. And also notice how the channel slopes downward.

I mentioned earlier in the week about the trendline measure rule, how price moving above a trendline can be reflected by the same amount below the line.

Although I show a channel, the measure rule didn't work in this case, did it? The drop in December 2018 far exceeds the rise in September 2018.

Returning to channel, notice how the index closed about midway up the channel. Also notice that the trends bounce from top to bottom and back again.

The last trendline touch was on the top. So even though the index closed higher by a strong push upward, the chart suggests that the upward move will fail. Price will drop down to the lower trendline.

That's hard to judge, really. The index nearly touched the bottom line yesterday (Thursday), so maybe we're actually going to go higher and tag the top trendline.

If the news about the trade war approaching a settlement is accurate, then perhaps we'll see the top trendline being touched before the bottom one. It could be that we pierce the channel going up, too.

So there you have it. We're either going to touch the top trendline or the bottom one. I feel like Trump. I'm always right even when I'm not. Smiley

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A Brief Look Back

Picture of a flower from my garden.

The following is a brief review of how the markets performed over time. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Down 95.7 points.
Tuesday: Down 313.98 points.
Wednesday: Up 181.97 points.
Thursday: Up 150.66 points.
Friday: Up 319.92 points.

For the Week...

The Dow industrials were up 242.87 points or 0.9%.
The Nasdaq composite was up 74.57 points or 0.9%.
The S&P 500 index was up 18.26 points or 0.6%.

Year to Date...

Dow Industrials
     2.1% down from the high of 27,398.68 on 07/16/2019.
     18.5% up from the low of 22,638.41 on 01/03/2019.
Nasdaq
     3.4% down from the high of 8,339.64 on 07/26/2019.
     24.8% up from the low of 6,457.13 on 01/03/2019.
S&P 500
     1.9% down from the high of 3,027.98 on 07/26/2019.
     21.5% up from the low of 2,443.96 on 01/03/2019.

Options Expiration

Many options expire this week, so traders will be looking to close out their positions, and that suggests increased volatility (large daily price swings).

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Swing and Position Traders: Chart Pattern Indicator

As of 10/11/2019, the CPI had:

3 bearish patterns,
76 bullish patterns,
419 patterns waiting for breakout.
The CPI signal is 96.2%, which is bullish (>= 65%).

The chart pattern indicator is bullish with 1 of 3 half triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

The following is based on an SFO article in December 2004 by John Seekinger, titled, "Take a two-dimensional approach." He offers these tips.

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  26,522  26,669  26,842  26,989  27,161 
Weekly  25,783  26,300  26,657  27,174  27,531 
Monthly  25,059  25,938  26,622  27,501  28,186 
S&P500 (^GSPC): Daily  2,945  2,958  2,976  2,988  3,006 
Weekly  2,851  2,911  2,952  3,011  3,053 
Monthly  2,783  2,877  2,949  3,043  3,115 
Nasdaq (^IXIC): Daily  8,004  8,031  8,073  8,100  8,142 
Weekly  7,707  7,882  7,999  8,174  8,291 
Monthly  7,456  7,757  8,000  8,301  8,544 

Here are the formulas:

Pivot point: P = (H + L + C)/3
First resistance level: R1 = (2 * P) - L
First support level: S1 = (2 * P) - H)
Second resistance level: R2 = P + (R1 - S1)
Second support level: S2 = P - (R1 - S1)
H = high price , L=low price, C=closing price

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 47.2%   Expect a random direction. 
 1 month down 21.3%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week up 47.4%   Expect a random direction. 
 1 month down 21.9%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 2 weeks up 35.5%   The trend may continue. 
 2 months up 39.0%   The trend may continue. 

How long can an index close higher (or lower) each day? The adjacent table shows how often consecutive up or down closes occur in the indices, based on the most recent trend of closes.

Low percentages suggest the market is overdue to turn (think of it as the likelihood that next week or next month will continue the trend, based on historical performance). Values of 50% mean random, so most percentages will be lower.

The analysis uses data going back 10 years for weekly percentages and 25 years for monthly percentages (or the start of data, whichever is more recent). Any unchanged closing price is interpreted as the end of the string of consecutive up or down closes.

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 2 days.

 Found Chart Pattern Name
21Pipe top
12Double Top, Adam and Adam
8Triangle, symmetrical
6Dead-cat bounce
6Double Top, Eve and Adam
6Triple top
5Head-and-shoulders top
4Pennant
4Flag
3Double Top, Adam and Eve

Large numbers of bullish or bearish chart patterns can signal short- to intermediate-term market trends (many bullish chart patterns can mean an uptrend will continue, for example). However, please realize that the short-term price trend could have changed since the pattern was discovered (this is especially true of pipe tops or bottoms, which are weekly patterns).

The 10 types of most frequently appearing chart patterns in the stocks, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Cement and Aggregates1. Homebuilding
2. Homebuilding2. Cement and Aggregates
3. Chemical (Basic)3. Insurance (Prop/Casualty)
4. Telecom. Equipment4. Toiletries/Cosmetics
5. Insurance (Prop/Casualty)5. Telecom. Equipment

-- Thomas Bulkowski

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Friday 10/11/19. Pattern Trading Setups for the Weekend.

Go to Table.

You can find setups based on a Fibonacci retrace by clicking on the link.

Click the link for a list of symbols from the table.

The following patterns were found manually, so the results may differ from those found using Patternz.

Mr. Bulkowski has excluded any securities he owns from appearing in the list. However, he may add any of the securities listed to his portfolio at any time, just as you can.

There were 12 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 587 stocks searched, or 2.0%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

Excluding ETFs, there were 5 bullish chart patterns this week and 6 bearish ones with any remaining (1) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bearish (down) turn.

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
ADTNDead-cat bounce      10/10/201910/10/2019Telecom. Equipment
BCPCTriangle, symmetrical      09/25/201910/10/2019Chemical (Specialty)
BSETHead-and-shoulders complex top      09/13/201910/08/2019Furn/Home Furnishings
CAGBroadening top, right-angled and ascending      07/11/201910/10/2019Food Processing
GPROPipe top      09/23/201909/30/2019Electronics
THGTriangle, symmetrical      09/18/201910/10/2019Insurance (Prop/Casualty)
HELEBroadening top      09/23/201910/07/2019Toiletries/Cosmetics
MYGNTriangle, symmetrical      09/24/201910/10/2019Biotechnology
PATKDiamond top      09/16/201910/10/2019Retail Building Supply
PCGDead-cat bounce      10/10/201910/10/2019Electric Utility (West)
REVFlag, high and tight      08/15/201910/09/2019Toiletries/Cosmetics
SMTCTriangle, symmetrical      09/23/201910/10/2019Semiconductor Cap Equip.

 

Weekly screen for chart patterns ending between 10/03/2019 and 10/10/2019. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
ADTRAN Inc (ADTN)
Industry: Telecom. Equipment
Industry RS rank: 5 out of 58
Stock RS rank: 553 out of 582
10/10/19 close: $8.81
1 Month avg volatility: $0.40. Volatility stop (for downward breakout): $10.02 or 13.8% above the close.
Change YTD: -17.97%
Volume: 1,686,300 shares. 3 month avg: 348,746 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Dead-cat bounce continuation pattern from 10/10/2019 to 10/10/2019
Breakout is downward 67% of the time.
Average decline: 18%.

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Balchem Corp (BCPC)
Industry: Chemical (Specialty)
Industry RS rank: 38 out of 58
Stock RS rank: 278 out of 582
10/10/19 close: $97.07
1 Month avg volatility: $2.46. Volatility stop (for upward breakout): $91.54 or 5.7% below the close.
Change YTD: 23.89%
Volume: 102,700 shares. 3 month avg: 82,003 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/25/2019 to 10/10/2019
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Bassett Furniture Industries Inc (BSET)
Industry: Furn/Home Furnishings
Industry RS rank: 34 out of 58
Stock RS rank: 489 out of 582
10/10/19 close: $13.90
1 Month avg volatility: $0.65. Volatility stop (for downward breakout): $16.25 or 16.9% above the close.
Change YTD: -30.64%
Volume: 45,000 shares. 3 month avg: 28,538 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Head-and-shoulders complex top reversal pattern from 09/13/2019 to 10/08/2019
Breakout is downward 100% of the time.
Average decline: 23%.
Break-even failure rate: 4%.
Pullbacks occur 67% of the time.
Price hits measure rule target 53% of the time.

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ConAgra Brands Inc (CAG)
Industry: Food Processing
Industry RS rank: 19 out of 58
Stock RS rank: 314 out of 582
10/10/19 close: $28.35
1 Month avg volatility: $0.84. Volatility stop (for downward breakout): $30.14 or 6.3% above the close.
Change YTD: 32.72%
Volume: 3,256,100 shares. 3 month avg: 3,423,360 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Broadening top, right-angled and ascending reversal pattern from 07/11/2019 to 10/10/2019
Breakout is downward 66% of the time.
Average decline: 15%.
Break-even failure rate: 20%.
Pullbacks occur 65% of the time.
Price hits measure rule target 32% of the time.

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GoPro (GPRO)
Industry: Electronics
Industry RS rank: 49 out of 58
Stock RS rank: 568 out of 582
10/10/19 close: $3.38
1 Month avg volatility: $0.28. Volatility stop (for downward breakout): $4.14 or 22.6% above the close.
Change YTD: -20.28%
Volume: 10,313,800 shares. 3 month avg: 5,624,629 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Pipe top reversal pattern from 09/23/2019 to 09/30/2019
WARNING: A dead-cat bounce occurred on 10/03/2019. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 01/02/2020 and a 38% chance by 04/02/2020.
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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Hanover Insurance Group, The (THG)
Industry: Insurance (Prop/Casualty)
Industry RS rank: 4 out of 58
Stock RS rank: 82 out of 582
10/10/19 close: $133.92
1 Month avg volatility: $1.92. Volatility stop (for upward breakout): $129.54 or 3.3% below the close.
Change YTD: 14.69%
Volume: 169,000 shares. 3 month avg: 201,215 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Monday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/18/2019 to 10/10/2019
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Helen of Troy Ltd (HELE)
Industry: Toiletries/Cosmetics
Industry RS rank: 8 out of 58
Stock RS rank: 25 out of 582
10/10/19 close: $154.32
1 Month avg volatility: $4.21. Volatility stop (for downward breakout): $162.82 or 5.5% above the close.
Change YTD: 17.64%
Volume: 492,200 shares. 3 month avg: 160,343 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Broadening top reversal pattern from 09/23/2019 to 10/07/2019
Breakout is downward 50% of the time.
Average decline: 15%.
Break-even failure rate: 18%.
Pullbacks occur 48% of the time.
Price hits measure rule target 37% of the time.

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Myriad Genetics Inc (MYGN)
Industry: Biotechnology
Industry RS rank: 44 out of 58
Stock RS rank: 431 out of 582
10/10/19 close: $28.84
1 Month avg volatility: $1.37. Volatility stop (for upward breakout): $25.66 or 11.0% below the close.
Change YTD: -0.79%
Volume: 304,300 shares. 3 month avg: 906,888 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/24/2019 to 10/10/2019
WARNING: A dead-cat bounce occurred on 08/14/2019. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 11/13/2019 and a 38% chance by 02/12/2020.
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Patrick Industries Inc (PATK)
Industry: Retail Building Supply
Industry RS rank: 17 out of 58
Stock RS rank: 421 out of 582
10/10/19 close: $42.04
1 Month avg volatility: $1.95. Volatility stop (for downward breakout): $46.33 or 10.2% above the close.
Change YTD: 41.98%
Volume: 196,200 shares. 3 month avg: 94,083 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Diamond top reversal pattern from 09/16/2019 to 10/10/2019
Breakout is downward 69% of the time.
Average decline: 21%.
Break-even failure rate: 6%.
Pullbacks occur 57% of the time.
Price hits measure rule target 76% of the time.

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PG and E (PCG)
Industry: Electric Utility (West)
Industry RS rank: 10 out of 58
Stock RS rank: 576 out of 582
10/10/19 close: $7.79
1 Month avg volatility: $0.83. Volatility stop (for downward breakout): $10.09 or 29.5% above the close.
Change YTD: -67.20%
Volume: 44,641,000 shares. 3 month avg: 5,870,049 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Dead-cat bounce continuation pattern from 10/10/2019 to 10/10/2019
Breakout is downward 67% of the time.
Average decline: 18%.

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Revlon Inc (REV)
Industry: Toiletries/Cosmetics
Industry RS rank: 8 out of 58
Stock RS rank: 63 out of 582
10/10/19 close: $25.75
1 Month avg volatility: $1.11. Volatility stop (for upward breakout): $23.07 or 10.4% below the close.
Change YTD: 2.22%
Volume: 77,800 shares. 3 month avg: 238,602 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Flag, high and tight continuation pattern from 08/15/2019 to 10/09/2019
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Semtech Corp (SMTC)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 9 out of 58
Stock RS rank: 352 out of 582
10/10/19 close: $48.78
1 Month avg volatility: $1.61. Volatility stop (for upward breakout): $44.82 or 8.1% below the close.
Change YTD: 6.34%
Volume: 312,500 shares. 3 month avg: 510,991 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/23/2019 to 10/10/2019
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Thursday 10/10/19. Intraday Market Direction: Nasdaq

The index climbed by 1.0% or 79.96 points. Since 02/05/1971 the index made 230 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 149 occasions.
     Average loss was -0.8% on 81 occasions.
Expect the index to close higher 64.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 174/314 or 55.4% of the time.
     The prediction of the index closing lower has been right 53/105 or 50.5% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

I show a picture of the Nasdaq composite on the 5-minute scale, but only 5 days instead of 10 to zoom into the price action.

Here's a useful tip that might not be all that useful. Smile

I drew an up-sloping red trendline along the bottom of price.

Notice how the move up to A, measured vertically from the trendline, mirrors what happens after, on the drop to B.

In other words, the height of A from the trendline is the same as the drop from the trendline to B.

Way cool, huh? It's the measure rule for trendlines.

Unfortunately, it doesn't always work (63% of the time it works, the last time I checked, that is).

$ $ $

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Nasdaq composite, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

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© 2019 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  7,405.38    
 Weekly S2  7,506.25  100.87   
 Monthly S1  7,654.56  148.31   
 Weekly S1  7,704.99  50.43   
 Daily S2  7,845.33  140.33   
 Low  7,873.52  28.19   
 Daily S1  7,874.53  1.01   Yes! The Daily S1 is close to the Low.
 61.8% Down from Intraday High  7,895.45  20.91   
 Open  7,895.96  0.51   Yes! The Open is close to the 61.8% Down from Intraday High.
 Weekly Pivot  7,898.75  2.79   Yes! The Weekly Pivot is close to the Open.
 50% Down from Intraday High  7,902.22  3.47   Yes! The 50% Down from Intraday High is close to the Weekly Pivot.
 Daily Pivot  7,902.73  0.51   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  7,903.74  1.01   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  7,908.99  5.25   Yes! The 38.2% Down from Intraday High is close to the Close.
 High  7,930.92  21.93   
 Daily R1  7,931.93  1.01   Yes! The Daily R1 is close to the High.
 Monthly Pivot  7,949.18  17.25   
 Daily R2  7,960.13  10.95   
 Weekly R1  8,097.49  137.37   
 Monthly R1  8,198.36  100.87   
 Weekly R2  8,291.25  92.89   
 Monthly R2  8,492.98  201.73   

 

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Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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