This study identifies a “Cup With Handle” formation on any chart in any time frame. The pattern is so named because, when viewing a price chart, it appears roughly like a cup. The price rises to a peak and then falls, forming the left side of the cup. From there the stock trades sideways for some time, then rises to form the right side of the cup. After completion of the cup, before the stock breaks out to new highs, the price often hits resistance and pulls back a little. This pullback forms what looks like a handle on the cup. The peak at the right side of the cup defines the buy or breakout point, referred to as the “pivot price”.
The ADAM Theory Price Reflection indicator has been developed for the TradeStation platform by Jan Arps based on a concept originated by Jim Sloman and perfected and popularized by Welles Wilder in his excellent trading book, The ADAM Theory of Markets, or What Matters is Profit. This TradeStation 2000i indicator will plot a set of Adam mirror-image reflection bars on any price chart on any data stream on any time period. In the “invert” mode it plots a mirror projection as described by Michael Jenkinsin his book, “Geometry of Stock Market Profits”.
This PaintBar study is based on the status of the ADX, DMI minus and DMI plus indicators. The DMI Long study paints the bars dark green when DMI Plus is above DMI Minus and the ADX indicates a trending market. Conversely, the DMI Short study paints the bars dark red when DMI Minus is above DMI Plus and the ADX indicates a trending market.
The Wave 5 Start indicator looks for the end of Wave 4 of a characteristic Elliott Wave pattern and marks that point on the price chart with a large colored dot. The dot will be magenta above the bar high if it marks the beginning of a Wave 5 down. The dot will be dark green below the bar low if it marks the beginning of a Wave 5 up. This point has been found to have a high correlation with potentially significant moves following a Wave 4.
When an oscillator valley is shallower than its predecessor while the price corresponding to the most recent oscillator valley is lower than the price corresponding to the previous oscillator valley, a “normal” diverging condition has occurred which generally signals an imminent price reversal to the upside.
The paintbars have one input value, LENGTH. The optimum value for this input will vary from market to market and time frame to time frame. We have found a value of 5 to work well on the S&P and T-Bond 5-tick and 1-minute charts. A value of 6 works well on the S&P and T-Bond charts with time scales ranging from 3 to 30 minutes.