Advance block is the name of a technical trading pattern. Technical traders look at the charts formed by securities (like those made by stocks moving day-to-day and hour-to-hour) and use the patterns to determine what will happen next. It's a little bit like ancient oracles and sheep entrails. Only technical trading sometimes works.
The advance block involves candlestick charts. The candlestick shows trading information in a particular way. It looks like a rectangle with a line through it vertically, kind of like a candle, but with a wick coming out on both ends. The rectangle (the candle body) represents the space between the opening and closing price during the time period in question (usually a day, but it doesn't have to be). The line (the wick) represents the space between the stock's high point and its low point during that period.
In an advance block, the stock in question is on a recent uptrend. The pattern specifically involves three candles. In each successive candle, the stock has moved higher, but the body gets shorter each time (meaning the stock has traveled a shorter distance each day).
Meanwhile, the opening prices of the second and third day are located within the body of the previous candle, meaning that its opening price was below the previous day's close, but above the previous day's open. Further, the highs reached each day (as indicated by the length of the vertical line) get higher every day.
The pattern is seen to forecast a bearish reversal (meaning the stock will turn lower), though this doesn't always happen.
Related or Semi-related Video
Finance: What is Technical Analysis?12 Views
Finance a la shmoop what is technical analysis okay we have fundamental [Fundamental analyst sat at a desk]
analysts who look at what the company does for a living how hard its products
are to manufacture how much they sell for how big global demand is how [Fundemental analyst check list]
powerful their brand is what their profit margins are in their growth
prospects from there how their balance sheet looks you know stuff like that
technical analysts don't care at all about any of that stuff those are
fundamental elements of a company technical analyst view stocks only as [Technical analyst chucks the list away]
trading sardines and really couldn't care less how the companies they are [Sardines with company logos on]
trading actually make money or run their businesses technical analysts follow
stock charts with influence from all kinds of shapes made by recent [Examples of shapes on a blackboard]
historical prices on a graph made by these stocks like you have a triple top
here right like so there's a hard line is trying to break out of that line line [Top line is highlighted]
says nook smacking you back down they can't break out so it's triple top and a [Hand smacks the price back down]
lot of gravity there so no maybe I'm short that stock at the end of that
triple top all right then you have the dome yeah it just kind of goes up but it
doesn't really want to break up so it's kind of trading down and then what do I
do with the stock here I don't know I don't know then you have descending tops [End of the dome is highlighted]
where Oh tried to break out oh but now it's a lower low because they miss their
earnings ah now it's a lower low and again they missed so the stocks going [Trend line showing the price going down]
nowhere it's pretty depressing around here then you have a saucer notably
shaped like a smiley face yeah you can see the two eyeballs there so you want [Smiley emoji appears]
to be long that stock somewhere in the middle there because
then it goes up and does better and yeah life's good and color and dimension gets
added to the stock charts via other technical things like volumes of shares [Colorful 3d stock chart]
traded in a given week or day or month if you're having a mini deja vu well it
might be because you just saw our M night Shyamalan dingdong
directed video directly cleverly called what is a Chartist and while they're [Girl working behind a computer]
basically the same thing technical analyst and chart us you know
same foot so yeah fundamental analyst concerned with nuts and bolts of the
operations of a business technical analyst concerned with pretty little [Descriptions of each analyst shown next to them]
drawings of the nuts and bolts reflection on a graph and interpreting
what that all means a kind of like staring at you know animal problems in [Looking at dung through a magnifying glass]
the jungle mental health analyst well I had to get a lot of these guys in their
office sorry different kind of therapy [Both the analysts at a therapist]
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