How to Trade Stock Streaks - Exploring a Reversal in CCIMar 02, 2021
The following is a brief exploration of whether or not to play for a reversal after a multiple day streak. In this case, CCI had a 7 day streak to the downside (close-to-close) on March 2, 2021.
What are the Odds of a reversal after a 7-day streak down?
Using the StockOdds Database, we can see the Odds of CCI increasing after a 7 day streak down are 50%. This may indicate a flaky "on the fence" opportunity. But, the goal is to be adequately compensated for the risk being taken. Instead:
What are the Odds of a reversal after an 8-day streak down?
At 66.7%, the Odds are much better! Wouldn't this be great if CCI went lower for the 8th day in a row? It may come to rest corresponding to the area of support on the daily chart (marked in the chart at the top of this article).