3 weeks tight is a bullish continuation pattern first documented by IBD’s founder, William O’Neil.
The pattern can used as an opportunity to add to an existing position as it often occurs after a breakout above a cup with handle or other technical pattern.
Head over to TradingView to install the Three Weeks Tight indicator
The 3 weeks tight pattern forms when a stock closes within approximately 1% to 1.5% of the prior week’s close for at least two weeks. The reason for the bullishness is that it indicates that investors who moved the stock upward in price since the breakout are not taking profits, the price is holding steady.
The buy point is just above the area of resistance formed at the highs of the three weeks plus 10 cents. The ten cent addition to the price is to ensure a push through the resistance at the high of the range.
Notes:
- It’s preferred that closes for each week are in the upper half of the stock’s range.
- Ideally, volume will increase significantly as the stocks moves past the buy point.
- This pattern generally performs best when the market is in an uptrend.
Features of this indicator:
- A configurable horizontal bar that spans the 3 week period.
- A vertical band that highlights the tightness pattern.
- A label to show the buy price after 3 week tight pattern.
- Optional alert when the 3 weeks tight pattern is recognized.
The features of the indicator are shown in the image below:
3 Weeks Tight Indicator – Live in TradingView
You can find the 3 Weeks Tight indicator, and the Pine Script code, via PlayTheTrade in the scripts area of TradingView.
The chart below is a live view of the 3 Weeks Tight indicator in TradingView.