PatternDNA Pattern of the Week: GGIEJEB
Seeking Alpha Analyst Since 2010
Pattern of the Week was pulled from a reaction low in Microsoft's (MSFT) chart. 
This seven day pattern starts with three bearish days, then three bullish days - mixed with a catchall day on the recovery.
| Match | No. of Patterns | 1-day % Win |
2-day % Win |
5-day % Win |
Average Return Per Trade (> 5 day) |
| Weakest | 242 | 46 | 50 | 51 | 4.4 |
| Weak | 187 | 45 | 50 | 53 | 4.2 |
| Neutral | 128 | 42 | 51 | 55 | 2.8 |
| Strong | 55 | 41 | 47 | 63 | 3.3 |
| Strongest | 30 | 50 | 47 | 67 | 4.0 |
Unusually, for a Pattern selected from a reaction low it wasn't particularly bullish. As the stringency of the Pattern match increased, the probability for a higher close on day 1 dropped (with the exception of the Strongest Match).
Day 5 performance was particularly interesting. A higher probability of a winning position on day 5 was countered by the Average Return Per Trade data which didn't correspond to higher returns (Average Return Per Trade assumes an initial stop of 10%, raised to 5% off the price reached on a 15% gain. Ultimate Profit Target of 25%). This was because the win percentage on the longer time frame didn't increase beyond the initial 58% and the average loss per trade got worse as the Match level increased.
For those looking to milk a trade from this Pattern (perhaps buying on the open of day 2?) there were 115 stocks matching at Neutral. This dropped to 19 at the Strongest setting.
One of these stocks was Rowan Companies (RDC).
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