Mikula Forecasting Company

MarketWarrior: High Low By Percent

The picture below shows a simple chart with the MarketWarrior indicator "High Low By Percent" applied to the chart. This indicator will identify market swings that are a minimum size or larger. The chart below has the minimum swing size set to 7 percent. This indicator offers a variety of labels to display the swing metrics such as bar count, calendar day count, percent change or more.




We can combined this indicator with basic pattern recognition to make market forecasts. The chart below shows the stock, Southwestern Energy symbol SWN. This stock is currently repeating a 4 point pattern. On the chart below I have labeled the four points A1, A2, A3 and A4 to identify this pattern. This is a 4 point expanding pattern as A3 was above A1 and A4 was below A2. This pattern occurred between November 2007 and January 2008.




The chart below shows a long term view of the same stock SWN. On this chart I have labeled the current repeat of the 4 point expanding pattern as B1, B2, B3, and B4. This pattern has occurred between mid May and early July 2008. Next we will take a close up look at the current pattern.




The picture below shows a close up view of the current pattern. Here we see the same pattern with B3 above B1 and B4 below B2. This is a 4 point expanding pattern. Using the indicator "High Low By Percent" we can see that the swing sizes we similar. A1-A2 was -15.465% and B1-B2 was -14.160% . A2-A3 was +26.164% and B2-B3 was +22.763%. Finally A3-A4 was -21.004% and B3-B4 was -22.509%.




To make a forecast for what swings will come next I use the indicator "High Low By Percent" to measure the three swings that came after the first pattern. After A4 there were 3 swings that lasted about a month and a half. These were approximately +21.7%, -10.9% and +39.3%. On the chart below I have drawn forecast swing lines labeled F1, F2 and F3. These lines represent the approximate time and percent change that occurred after the first pattern than ended with A4 in January 2008. From B4 to F1 is an upswing of +21.724% with an approximate target price of 49.7. From F1 to F2 is a decline of -10.966% with a target price of approximately 44.25. Finally F2 to F3 is an upswing of +39.382% with a target price of 61.71. If this pattern repeats, the B4 bottom should form any day now in the "Bottom Reversal Time Windows" seen on the chart below and the pattern should end at F3 in mid to late August.