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I suspect repeating prices play a role in causing unclear signals in the more well-known price momentum indicators. Repetitive price patterns definitely confound my Time Giant moving average.
Seven major types of repetitive price patterns are listed in this article. Using Time Giant as a diagnostic tool helped uncover seven major types.
My research also suggests that both thinly-traded stocks and actively-traded stocks move according to one or more of these seven major repeating patterns. Actively-traded stocks repeat in sophisticated versions of these seven major archetypes.
The good news is the repeating price patterns found typically last for a few days to two weeks in actively traded stocks. Here are the seven major types of repetitive patterns my research has uncovered.
I can't remember reading anywhere else discussions about the bad effects that repeating prices have on clearness of signals given off by price momentum indicators. Have you? No? Then you read it here first on TimeGiant.Bravehost.Com.
Repeating series Example
1) Constant prices $1, $1, $1, $1, $1, $1, $1, $1
2) Alternating prices $1, $2, $1, $2, $1, $2, $1, $2
3) Repeating prices $1, $2, $3, $1, $2, $3, $1, $2, $3
4) Repeating prices $1, $2, $3, $4, $5, $6, $7, $8, $9
5) Repeating prices $9, $8, $7, $6, $5, $4, $3, $2, $1
6) Repeating prices $1, $2, $2, $1, $2, $2, $1, $2, $2, $1, $2, $2
7) Repeating prices $1, $2, $2, $4, $2, $4, $1, $2, $2, $4, $2, $4
Finally, the chart below visually shows the bad effects which are the squashing and the flattening of peaks and valleys.
The word "Squashed" points to a top and bottom which have a compressed appearance due to the bad effects of repeating prices (see chart below). Squashed is bad. Pointy is good! The word "Pointy" shows a normal-looking top and bottom of a Time Giant momentum indicator. See how sharp and pointy the top and bottom normally look? Pointy is good.
The green curve shown in the bottom chart is the Time Giant momentum indicator for Crystallex International Corp.
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