The Thursday-Friday-Monday Pattern | Tom Hougaard

What happens when we start out trading on a Monday, and the previous Thursday’s high was higher than Friday’s high? Over the last 52 weeks, there were 21 instances where the price action on Friday was unable to trade above the highest point of the previous day, Thursday. I then looked at what happened on the following Monday. If there was a holiday on the Monday, I would view the price action on the Tuesday. Let me show you some examples:

When Thursday’s high was higher than Friday’s high, Monday traded below Friday's low.

 

Considering the random nature of the markets on a day by day basis, there shouldn’t be a pattern, and if there is, I have found an edge to exploit. I was surprised to find that on 20 out of the 21 occurrences, the Dow traded lower on Monday, often lower than Friday’s low. 

 

Here is how to apply this strategy:
1) Switch to the daily time frame.
2) Confirm that Friday's high is lower than Thursday's high.
3) Mark the low of the Friday candle.
4) Move to a smaller time frame for entry.
5) Wait for the price to reach a bearish fair value gap.
6.) Enter a short position, expecting the price to hit Friday's low on Monday.
7) On Monday, monitor the regular New York trading session.

I am not in the business of deluding people, so here is an example where it did not work: 

 

It did not work: Monday did not get below the lows of Friday.  

 

And here is one I traded earlier in August 2019. I went home short over the weekend –always a very risky strategy – and I was rewarded for it (this time!):

I assume you notice that there are often gaps associated with the Thursday-Friday-Monday pattern. Gaps are an inevitable part of trading life. 

Quoted from:
Tom Hougaard (2019)  - What I Wish Someone Had Told Me 20 Years Ago. 

 

Examples of Tom Hougaard's Scenario Analysis:
If Monday so far is the highest traded point for the last 3 days, i.e. Monday, Tuesday, Wednesday, 

then how often is Thursday going to trade below the low of Wednesday?
What happens to Monday if the previous Friday trades below the highs of Thursday?

See also:

Tom Hougaard's YouTube channel.  

Darya Filipenka (April 3, 2024)  - ICT Fair Value Gap.

Darya Filipenka (March 18, 2024)  - ICT Draw on Liquidity.

Cameron Benson (August 20, 2023)  - Three-Push Reversal Patterns. 

orderbloque (March 1, 2025)  - Market Logic Based on Liquidity, Volume, and Inefficiency.

Tom Hougaard (2022) - Best Loser Wins: Why Normal Thinking Never Wins the Trading Game.

oooo0O0oooo

 

But is that actually true: does Tom Hougaard's Thursday-Friday-Monday Pattern really have an edge? Here are the results of the respective 2003-2025 backtests for the S&P 500, Nasdaq, Dow Jones, and Russell 2000:

 

S&P 500: 472 setups; 231 wins: 48.94% win rate: No edge.                            
Nasdaq: 449 setups; 249 wins: 55.46% win rate: Slight positive edge.              
DJIA: 458 setups; 223 wins: 48.69% win rate: No edge.                            
Russell 2000: 464 setups; 258 wins: 55.60% win rate: Slight positive edge.

 

 

                            

 

Second Week of April Up 72% of the Time | Paul Ciana

Bank of America technician Paul Ciana notes that while April has historically been a strong month, "over the last ten years, the SPX trended down in April and bounced back in May," but week 2 of April has been up 72% of the time.

 

 BoA Paul Ciana: Week 2 of April up 72% of the time.

 

S&P 500 (30-Minute Bars).

Hurst's nominal 10-Day Cycle points to a low on Tuesday, April 8 around 8:30 a.m.

Week 3 of the 3-Week Cycle (click HERE).

SPY (Monthly Bars).

42-Month Kitchin Cycle, 18-Month Cycle, Premium-Discount Levels, and Buy Zone. 

Please note, David Hickson expects the current 18-Month Cycle to bottom around May-June;

three monthly pushes from the breakout to the downside (click HERE).

 

J.M. Hurst's Nominal Cycles.

 

VIX (Daily Bars). 

 

S&P 500 vs CBOE Options Equity Put/Call Ratio (Daily Bars EOD).

 CNN Fear & Greed Index: Extreme Fear.

 

S&P 500 vs CNN Fear & Greed Index:

April 4, 2025 @ 4.27 = lowest since May 11, 2022 @ 4.03. 

 

 Bloomberg: Nasdaq 100 dropped 20% and is now in a Bear Market.

 

BoA Michael Hartnett: S&P 500 buying levels now at 4,800-5,000. 

 

Steve Miller (April 4, 2025) - Stock Market Cycles Analysis (SPX, NDX, VIX, TNX).

S&P 500 vs Blood Indicator (= US 03-Month Treasury Bill / High Yield Spread)

 

And finally, the Ultra Bear Perspective:

 

  » Stop trying to buy the dips. The S&P 500 still has 1500-2000+
points of downside left over the next 2-3 years. «
Trigger Trades, April 4, 2025.

 

See also:

 Jason A. Jankovsky (September 25, 2023) - The Importance of Buy/Sell 50% Retracements.

Price Action Patterns & Entries at High and Low of the Day | Cameron Benson

Our focus is on price action trading at key levels: daily high and low, and the previous day's extremes. We examine how price reaches these levels — through Stair-Stepping or Ramping — and its subsequent behavior. The price action patterns include M's, W's, Double Tops/Bottoms, and Pin Hammers at daily highs and lows. 

 

 Stair-Stepping and M Patterns: These indicate potential reversals at daily highs or lows, 

with detailed entries and exits often managed through lower time frames.

Ramping is characterized by parabolic price movements and often leads to swift reversals. Observing tight candle patterns with minimal overlap helps identify strong trends and potential breakouts. We also look for specific patterns like Stair-Stepping and Three Pushes, with Peak Formations signaling possible reversals.

 

 Ramping Behavior: Recognized by tight, parabolic moves followed by rapid reversals. 

The ramp into extremes usually signals significant price shifts.

The following 5 minute charts of the NASDAQ are from last week (September  9-13, 2024). They show Entry and Exit Strategies, using Pin Hammers and Engulfments for Entries, and managing stops based on price action, with adjustments for larger, more volatile bars.

Monday, September  9 (Day 1 of 3 Day Cycle):

 

 Identified an M pattern at the high of the day with a pin hammer and engulfment, suggesting a strong short entry.

Tuesday, September  10 (Day 2):

 

Despite a promising setup, a large entry bar resulted in a stop-out. 

Emphasis on avoiding large entry bars and managing risk.

 

Wednesday, September 11 (Day 3/1): 

 

 Similar to previous days with M patterns and engulfments, also highlighting entry points and risk management.

Thursday (Day 2) and Friday (Day 3), September 12-13:

 

 Charts show patterns like descending triangles and W formations, 

with a focus on understanding price behavior relative to session timings.

 

Successful short-term trading relies on recognizing and acting upon the above presented price action patterns, managing entries and exits based on contextual behavior, and adapting strategies according to the specific market conditions within the 3 Day Cycle.

 

Reference:
Cameron Benson (September 14, 2024) - Price Action High And Low Of The Day (Day Trading Entries)(video) 
Cameron Benson (September 14, 2024) - Price Action High And Low Of The Day (Day Trading Entries)(pdf)
Cameron Benson (June 16, 2024) - The Complete 3 Day Cycle Short-Term Trading System.

Stacey Burke (December 5, 2023) - The Three Day Cycle & Parabolic Trade Setups.
Cameron Benson (August 20, 2023) - Three-Push Reversal Patterns.

 Richard D. Wyckoff (August 30, 2024) - Re-Accumulation & Re-Distribution Range Patterns.

Richard D. Wyckoff (December 21, 2022) - Accumulation & Distribution Schematics.  

On Range Expansion, Monkey Hammers, FAFO & NFP Weeks | Stacey Burke

» When you get a range expansion, the market is sending you a very loud, clear signal 

that the market is getting ready to move in the direction of that expansion. «     

 —  Paul Tudor Jones 

  

» FAFO [F*** Around and Find Out] is when you try and scalp the high or scalp the low - or jump in because a market is moving - because something is up high or down low. If other time frame traders are driving the move ... be careful - that's called FAFO and is not a specific 90/10 easy money making trading setup. That's called gambling.

If the train has left the station ... find your next best candidate for your session that was on your watchlist. How is price behaving in the timing window - at the levels? No 90/10 easy money best playbook trading setup that you can see that is from your rinse and repeat templates? Then shut it down and walk away - or do what the experts do and hunt for science projects.

Behaviour of the trader - mindset of the trader - best 90/10 easy money playbook trading setup - timings - levels - behaviour of price - execution skills of the trader - behaviour of the trader after the trade is completed. Rin$e and repeat means exactly that ... same setups over and over and over again . «     — Stacey Burke

 

» It's a Non-Farm Payrolls week - don't be surprised to see a four-day template. The day count doesn't change. Wednesday was the reset day, and now we are in the backside of the week. We might get a monkey hammer on Thursday, and Friday setting up a Non-Farm Payrolls bounce trade. «     — Stacey Burke

 

 

Fed Chair Powell's promise to lower rates may trigger market reversals (HERE & HERE & HERE).

See also:

Stacey Burke (September 3, 2024) - Trading Beginning of Month & after Long Holiday Weekend. (video)

George Taylor's Three-Day Trading Cycle | Scott Hoffman

In my opinion, George Douglass Taylor was one of the greatest trading thinkers, and luckily he left behind one book on trading: 'The Taylor Trading Technique' (1950). This book lays out his 'Taylor Book Method' for swing trading in futures. Taylor postulated that the markets had patterns based on "market engineering" from the "powers that be" in the grain markets. These insiders would frequently cause prices to decline to set up a buying opportunity for themselves. Then, after the market rallied sufficiently to yield profit for these insiders, a short-term top was created to give them a selling opportunity. The market would sell off, and the cycle would start again. 

 

George Douglass Taylor was a grain trader in the 1940s and 1950s at the CBOT pit
and is credited original author of the 3 Day Cycle Short-Term Trading System.

The effect of this engineering was to amplify the natural rhythm of the market, creating false moves that would fool traders into buying when they should be selling, and vice versa. The thrust of the Taylor Technique is to identify this rhythm and take advantage of the "false moves". I have long maintained that if an individual could identify moves in the market that would serve to inflict the most pain on unwary traders then they would have a great trading system. I believe the Taylor Technique does that. Taylor created this method for the grain futures markets, but I find it equally applicable in the financial futures markets today. 

 

George Taylor's Three-Day Trading Cycle.

George Douglass Taylor’s system of short-term swing trading is based on the premise that the market moves in two to three day timeframes, moving from a low to a high and back to a low. The other important concepts are the importance of the previous day’s high and low, the length of upswings relative to downswings, and being a solely technical trader (ignoring fundamentals).

Cycle Day #1 – Buy Day

The first day of the cycle is the buying day. Look for a Buy Day two days after a swing high (the highest high of the past few days). On a Buy Day, look for the market to make its lows first, finding support around yesterday’s low. If the market opens flat to higher, look to buy the first sell off towards the previous low. If the market trades under yesterday’s low, be careful about going home long. The market should close higher than where it opened. If it is making new lows late in the day, it is usually best to exit. You can often get in the next day at a better price.

 

Cycle Day #1 - Buy Day

Two-Day Rate Of Change = ROC(2) 

Generally, it’s good rule of thumb not to buy late in the day on a buy day if the market is heading lower or closing lower than where it opened. Odds favor a lower opening the next day, giving you a better enter price. Likewise, if the market is going to close lower than it opened, don’t be afraid to liquidate your position. Odds are in your favor that you’ll be able to buy at a lower price the next day.

Cycle Day #2 – Sell Day

If you are long and the market is closing in your favor, carry your long position overnight. Odds favor a higher opening the next day setting up the Sell Day, the second day of the cycle. On the Sell Day you should look to sell into strength, liquidating your position, and going home flat. Often, the sell day trades on both sides in what I call a 'fade' day. A fade day often follows a trend day and can be traded from either side.

 Cycle Day #2 - Sell Day

Cycle Day #3 – Sell Short Day

The third day of the cycle is the Sell Short Day. The Sell Short Day is the mirror image of the buying day. On a sell short day, you should be looking to sell early morning resistance, looking for resistance around the previous day’s high. The market should not be making highs late in the day, if it is you should be able to get a better entry point the next day. On a Sell Short Day, the market should close lower than it opened. The Sell Short Day is often followed by a 'Fade' day.

 

Cycle Day #3 - Sell Short Day.

That is the gist of Taylor’s technique - a rhythm of buy-sell-sell short. I don’t always recognize where we are in Taylor’s cycle (you’re always learning!), but on days when it is clear, at the least it gives you a good indication of the market’s bias for that day. In swing trading, the relation of the open to the close should indicate the direction of the next morning’s opening. This helps you determine whether the odds favor being a buyer or a seller on a given day.

Reference:

Scott Hoffman (2012) - Insights of a Swing Trader. (videos)

Scott Hoffman (2003) - Swing Traders Users Guide.

George Douglass Taylor (1950) - The Taylor Trading Technique.

 

See also:

Cameron Benson (2024) - The Complete 3 Day Cycle Short-Term Trading System.

Larry Williams (1998) - Swing Points as Trend Change Indication. 

Linda Bradford Raschke & Laurence A. Connors (1996) - Street Smarts: High Probability Short-Term Trading Strategies.

The Market Makers Method | Jones Zondo

Price is a reflection of the number of transactions and the price paid for these transactions. A large number of transactions are required in order to shift price. The Forex market is said to trade about $4,000,000,000,000 [four trillion dollars] on average daily. The bulk of transactions are executed by large “Warren Buffet” institutions, and not by laptop traders such as ourselves.

 » A typical pattern of behavior particularly when analyzing the Three-Day Cycle is to be able
to identify a peak high followed by three moves down and a reversal which will form a peak low. «

Market Maker ability to dominate the market is overwhelming. It costs roughly 10,000 Lots to move the market by 1 pip, with this in mind Market Makers have the ability to move the price at will and retail traders can’t. For a retail trader to truly succeed in Forex, you need to at least have a concept of this Mammoth process so that you will understand what is happening and why. Rather you adapt to trade with them instead of against them once we are done with the secrets. Once you realize that price is moved as a result of intention, logic decision and the idea that price is a product of emotional feeling (sentiments) of various traders is misguiding “BS”. Failure to realize this, your trade career will be emotion driven leaving you to react to every trade.

Quoted from:
Jones Zondo (2018) - Market Makers Secrets. Private study notes extracted from various entities. 

 

See also:

Steve Mauro (2011) - The Market Makers Method.

Cameron Benson (June 16, 2024) - The Complete 3 Day Cycle Short-Term Trading System.

Michael J. Huddleston (2016) - ICT Forex - Market Maker Primer Course. (videos)

Complete 3-Day Cycle Short-Term Trading System | Cameron Benson

 

[...] Back in the 1950s George Douglass Taylor was a pit trader and he is the original author of the 3-Day Cycle. He watched the people trading larger capital and started to notice a rhythmic 1, 2, 3 to the markets. He used these rhythmic studies to develop the 3-Day Cycle Short-Term Trading System.

1. A Buy Day (Day 1) occurs after 1-5 Days of decline, when a market that has opened, made its low in the morning, and closed in the upper third of the days range.
2. Then follows the Sell Day (Day 2) which in fact (contrary to what its name suggests) rallies higher above Day 1 and one could already cover long positions on that day. However, if the 'Sell Day' has a strong close, a directional follow through could occur the next day (Day 3/1).
3. The Sell Short Day (Day 3) could come immediately following the Buy Day (Day 1), if price action presents in the opposite direction. However, after Day 1 the market could also move higher for 2-3 days before printing new highs in the morning, and close in the lower third of the days range. If you ever notice a market breaking out for 4, 5, 6, 7, 8 days in one direction, it's probably because it is breaking out of a larger structural pattern. [...] 
   

 » Once you see it, you can't unsee it. «

 

» The largest Aha moment I ever had when I started trading the 3 Day Cycle strategy was that the above three things can be traded completely different. It is massively important to your understanding of this style of trading:

(1.) 3 Day Setups using signal days (previous day's high and low, inside day, first green/red day).
(2.) Weekly Template.
(3.) 3 Day Cycle.

 

All three can also be mashed together into one big trading strategy that will present setups for parabolic trend trades, short squeeze, long squeeze, and some other setups that can help you get into the trade. « - Cameron Benson, 2023 

 

Reference:
Cameron Benson (June 15, 2024) - Ultimate Day Trading Guide (Setups and free 56 pages PDF Included)(video)

Cameron Benson (2023) - Stacey Burke Style Trading in a Nutshell.

Cameron Benson (2023) - Weekly Market Maker Templates Are MIND BLOWING. (video)

 Cameron Benson (2023) - The 3 Day Cycle.
Cameron Benson (2023) - The 3 Week Cycle.

 Cameron Benson (2023) - Trading the Pump & Dump Pattern.

Stacey Burke (2023) - The Three Day Cycle & Parabolic Trade Setups.

Stacey Burke (2022) - Best Trade Setups Playbook.

Linda Bradford Raschke (2001) - Swing Trading - Rules and Philosophy.

Daye (2024) - The Quarterly Theory.

Giovanni-1- (2024) - AMDX-XAMD.