A run, in technical analysis, is a series of consecutive price movements that occur in the same direction for a particular security, sector, or index. A run is constituted by a prolonged uptrend or downtrend, characterized by repeated daily gains or losses. For example, if a stock’s price increased each day for five trading sessions, it would be said to be in a bull run, which may also be referred to as a rally. A bear run would consist of consecutive down days.
Runs that appear in certain sequences, such as a bear run followed immediately by a bull run, are often used with charting strategies as signals to identify technical levels for entry or exit from a trade. When looking at a run, traders should consider the underlying volume behind the move as an indicator of the strength of the run. Traders may also want to consider other factors surrounding the move, including other technical indicators and chart patterns.
A run is a series of consecutive price increases or decreases in a given security. Often times, traders refer to a run as a bullish rally or a bearish rally. There is no set period of days that classifies a run, but conventionally, most traders consider three or more consecutive price increases a run.
The chart below provides a salient example of a bull run that appeared in the SPDR S&P 500 ETF (SPY). SPY shares experienced a run between mid-January and late-February of 2017. After a three white soldier pattern (see below), the index continued to break out over the ensuing three weeks. This particular run consisted of six days of consecutive moves higher. The run eventually ended when the index began to consolidate before a further move higher in the ensuing weeks in a more mixed fashion.
The three white soldiers candlestick pattern is a type of run that consists of three consecutive long-bodied candlesticks that have closed higher than the previous day with each session’s open occurring within the body of the previous day’s candle. In general, the three white soldiers pattern is a bullish reversal when it occurs after a downtrend, but it may also act as a continuation pattern if it occurs during an uptrend or following a period of consolidation.
Several other candlestick patterns may also be helpful when analyzing runs. For example, a bullish engulfing may represent the beginning of the run, while doji stars may signal the end of a run. Traders should keep these candlestick patterns in mind when analyzing runs.