Advance Block

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.