Important Chart Pattern – Railroad Tracks in the Country
On Monday both AAPL and AMZN formed the identical chart pattern, but AAPL was going in one direction and AMZN was going in the other. This gives us a great opportunity to show the pattern in action.
AMZN is more obvious so we’ll start with that. In the chart below you can see that the last two bars have the following distinguishing features:
- The first bar is comparatively long, reaches new highs, and opens near the low while closing near the high for the day.
- The second bar is roughly the same length, opens near the high and closes near the low for the day.
- The two together resemble railroad tracks due to their long length (compared with other bars on the chart) and similar length to each other.
- Because the tracks both stick out in their entirety above all the other bars in the charts (here they form multi-month highs) and the with no other “traffic” around, they are described as being in the country”.
- If you were to merge the two bars together, you would form a doji with the open and close tight together and near the low for the two bars.
This pattern is called “Railroad tracks in the country”, and it is a classic reversal signal – and here it didn’t disappoint, with a massive reversal.
AAPL has a similar situation but with the railroad tracks forming new lows. In AAPL’s case the tracks could be longer in order to be ideal, but you can see the similarity.
- The first bar is comparatively long (could be a tad longer to be perfect!), reaches new lows, and opens near the high while closing near the low for the day.
- The second bar is roughly the same length, opens near the low and closes near the high for the day.
- The two together resemble railroad tracks due to their long length (ideally could be longer here) and similar length to each other.
- Because the tracks both stick out in their entirety below all the other bars in the charts (here they form multi-month lows) and the with no other “traffic” around, they are described as being in the country”.
- If you were to merge the two bars together, you would form a doji with the open and close tight together and near the high for the two bars.
I’m trying to create a decent algorithm for this wonderful pattern which has a very high hit-rate, and will certainly deploy it as a filter on the OVI Traders Club Reversal area when I’m satisfied.
All the best
Guy
