Yard Charts

Yard Charts technical analysis software is able to discover a Top end Sweep chart pattern

Top End Sweep is a YardCharts market reversal bearish pattern comparable to an imaginary right-angled triangle. It is made up of two sides that meet at a 90° angle, which are linked by a hypotenuse. In Yard's technical analysis we make the following associations:

 

 

• Long side:  is the horizontal line drawn by uniting two or more, approximately equal market lows in a given temporal segment. (See line 1, in picture A);


• Short side: is the imaginary vertical line which size is equal to the distance from the horizontal line to the market high formed above the horizontal. (See line 2, in picture A);


• Hypotenuse: is the imaginary sloping line that results by linking the market lows corresponding to the bounces formed under the horizontal. (See line 3, in picture A).

 

 

The ideal model of Top End Sweep

The bounces above the horizontal line must be at least two, preferably three, and their highs are in ascending order.

Any of these bounces are preferable when the number of bars corresponding to the up-move from the horizontal up to the bounce high is greater than, or equal to the number of bars that make the down-move from the bounce high back to the horizontal line. This means that within the bounces the up velocity is slower than the down velocity.

Not all bounces in every triangle will develop exactly as such, but in terms of performance, it is advisable that the last and closing bounce present this characteristic.

Confirmation
The formation of a Bottom End Sweep is confirmed when the market has performed at least two bounces onto the horizontal and satisfies the following two conditions:

• as soon as the market breaks the horizontal from above, the market falls down to a minimum distance (50% of the short side) under the horizontal, trough 1 in picture B;
• as soon as the lowest level below the horizontal, trough 1, has been touched the market retraces back up within a close range around the horizontal. This retracement represents theentry point. See picture B.

 

Cases in point

A stop loss is advisable within a certain percentage point above the blue line, depending on how deep is the triangle and the trader's risk appetite. In any case should the market rise back above the last bounce high, a stop loss is paramount as this means the market has failed the pattern.
Below are shown 3 real Top End Sweeps found by Yard Chats in the recent past (Nasdaq and NYSE markets), which have successfully performed shortly after the day of the buy alarm. That means the market in the particular stock, without first hitting the stop placed 10% below the entry point, has fallen, from the entry point, as far as twice the size of the short side.