William Dunnigan was a technical analysis pioneer, especially with his "one-way thrust" concept that pinpointed market trends. Here's a recap of his method, developed back in the 1950s, and instructions on how to program it into modern trading software.
World-class traders are able to identify chart patterns in the market and take trades based on these patterns. They often look for patterns indicating trades in the direction of the long-term trend after a countertrend move has run its course. This is a powerful concept that can be used to trade almost any market and produce
William Dunnigan combined this countertrend concept with chart pattern recognition to develop his one-way thrust method. We'll analyze this method, then mechanize and test a trading idea - the concept of finding support at double bottoms - which is based on his pattern-recognition methodology.
The first part of Dunnigan's method is defining what he called barometric movements, which is the relationship between two to three succeeding time periods. Various combinations of different type bars define Dunnigan's barometric market movements:
1. Up bar: A bar with both a higher high and low.
2. Down bar: A bar with both a lower high and low.
3. Outside bar: A bar with both a higher high and lower low.
4. Inside bar: A bar in which the range is inside the previous one.
5. Long-range bar: A bar followed by two or more inside bars. ------------------------------------>