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.

 

 

                            

 

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.