Capturing the Beginning Price of a Trend

[Emrys]

Hello guys, I’m trying to scan overbought stocks, whereby the existing trend has reached a certain level and offers shorting opportunities. The biggest problem so far is how to capture the beginning price of a trend. Any ideas?

 

[MerryDay]

Welcome @Emrys,
There is no one standard method of capturing the beginning of a trend. Here are some ways that posters use:

Contraction/Expansion: Stock consolidation is essential to understanding price action. Well, worth the Google.

The contraction phase indicates a period when the market is in consolidation, marked by a tightening of the market with narrow ranges. This period is marked by low institutional volume. During this period, the institutional traders are working out the next big move.

Popular Indicators Include:
B3 Consolidation Box https://usethinkscript.com/threads/...kout-breakdown-indicator-for-thinkorswim.103/
ECI Expansion Contraction Indicator Gaussian https://usethinkscript.com/threads/eci-gaussian-indicator-for-thinkorswim.1160/


Stochastic Stochastic signals trend shifts. All trend-following strategies should have it in their toolbox. There are a dozen built-in TOS Stochastic studies and indicators and 101 flavors of custom studies on this forum. This post has a script that labels what the various moves of the Stochastic means: https://usethinkscript.com/threads/stochasticfull-label-help.7515/#post-72694

There are so many more, perhaps others will chime in. Otherwise, searching through the forum will provide volumes on how posters are using oscillators to find shorting opportunities.

 

[Emrys]

Thank you @MerryDay for offering very rich information!

The idea is price-centric, but I really doubt if continuously comparing the most recent close price with the close price on the previous opening day would ever work, because scanning does not allow too complicated calculation.

Stochastic sounds like an interesting way to spot the beginning of a trend. I will definitely look into this approach!

 

[MerryDay]

The script to load in the scanner for "most recent close price with the close price on the previous opening day" is:

close is greater than open from 1 bar ago

The scan should be run w/ a daily aggregation