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Critical Day Analysis

Our critical day analysis is all about trend reversals. We tell you when there is a high potential for a reversal of the short trend and we've been doing it since 1994 with an 80%* accuracy.

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WALK THROUGH A CRITICAL DAY

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Chart Types

Displaying price and volume information can be done in a variety of ways. There are 9 main styles of displaying price plots that have use in market analysis. The Bar chart is one of the most common methods. A bar chart indicates a single bar that extends from the high to the low for the trading period it is meant to depict. In addition, the opening and closing price levels could be displayed as small branches coming away from the main bar at the appropriate level. Closing prices are put on the right of the bar. Opening prices are put on the left side of the bar. In addition to Bar charts, traders have discovered the use and value of using Candlestick charts, candlevolume, equivolume, kagi, line, point and figure, renko and three line break. Each has benefits and drawbacks and a strong understanding of different graph plots should accompany personal trade development.

The value of our critical days is that we have an 80%* success rate of letting our members know in advance when to expect a reversal of the short trend. On the graph below, we use candlestick displays because we find that it easily depicts current supply and demand changes and allows us to see the short trend by following the flow of candle bodies just prior and after a critical day signal. A critical day is given to members on average 3 days in advance and you can see by looking at the blue dots representing a successful critical day that price trend reversals occur. That is, the flow of candle bodies heading into a successful critical day or day marked with a blue dot, reverses coming away from the critical day. This can be very valuable to short term position traders, equity, option and futures traders and anyone interested in navigating the short term market.

The Most recent Critical Days on the graph below are shown with Blue and Red dots. The blue dots, above or below the price plot, indicate successful critical days. Red dots indicate failures. A successful critical day indicates that the short trend did reverse, as expected by members, going into that period.

Candlesticks Line chart Bar chart

A look at some chart types

Candlevolume charts are like candlestick charts in that they indicate the open/close/high/low and a quick reference of market trend. In addition the candle sticks widen or are thinned as a measure of the volume recorded for that particular day. Candlevolume charts represent price and volume data in each candlestick.

Equivolume charts display the high and low of the period and the width of each plot represents volume.

Kagi charts are designed to react to plot a single line until price reverses by a predetermined amount where another line is then begun. It is an attempt to smooth out the noise of daily trading activity so that trend can be more clearly represented. The thickness of Kagi lines are significant when prior highs and prior lows are exceeded.

Point and Figure charts disregard the passage of time and chart only price changes. An "x" is drawn when the price rises by a predefined box size. An "o" is drawn if the price falls by a predefined box size. No x's or o'x are drawn if the market moves an amount less than the box size.

Renko Charts display a price movements if they are bigger than a fixed amount.

Three line break charts display new lines if the close of the period moves outside of the period of the previous block of trading. If not, then no lines are drawn.

To the right technical studies are examined in more detail to provide a sense of conformational evidence for traders of the critical day. Click on any of the terms to take a closer look at a technical discussion on that topic. All formations, patterns, indicators and technical tools fail at various times and so should only be used to build a body of evidence in forming a trading decision rather than being solely relied upon. There are a number of valuable studies that lead to intuitive understandings about price and volume but a strong compliment to technical analysis is an understanding of the trends and changes in the fundamentals and economic activity that ultimately lead valuation levels in the markets.

Walk through a critical day

The graphs show a price plot of the Dow Jones Industrials from Sept 28/00 to early November. The First graph ends on November 3/00, two days before an upcoming critical day on November 7/00. Our members looking at the market are expecting a trend reversal to occur due to the high rate of success in our research. Ideally a member will be using their own skills to judge the supply and demand changes, using technical and fundamental indications to confirm suspicions of a reversal, and trade accordingly.
On the second graph we see that the price action on November 6 was a bullish day, reversing the short trend so that the short trend leading into the critical day is now up. A critical day is an expectation of a reversal of the short trend that immediately precedes the critical day. In the case of the November 7 signal, given to members 3 days before, is an indication that the upward moving trend, recognized at the close of November 6 is expected to reverse direction.
On the third graph we can see that November 7 was a low volatility after a large gain on November 6 of about 160 points for the Dow Jones Industrials. The subsequent move over the three days following the November 7 signal saw the Dow Jones Industrials fall 376 points. The next day, November 13, the Dow Jones Industrials lost an additional 83 points with intra-day low a full 609 point loss since the open on the critical day.

Most recent signals

A closer view of the most recent signals. You can see the short trend immediately prior to a successful critical day, reverses coming away from the critical day. Often a failed critical day will indicate a stronger bias in the market for continuation of the trend that was in place prior to the critical day. A failed signal can therefore provide as much information and opportunity as a successful one. Take a look at tech studies to develop a sense of trend reversals and use.