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Continuity + Signals + Broadening Formations

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Definition Continuity + Signals + Broadening Formations is all of TheStrat at once. Continuity is the evidence. The signal is the timing. The broadening formation is the map: where price goes and how far.

Take reversals back in the direction of full timeframe continuity, out of broadening formations. One or two of the three is not enough. All three must line up.

The clean example: five steps

  1. Draw the broadening formation lines right to left from the newest high or low. Redraw at each new high or low, and when price trades through a line.
  2. A signal forms at one line: bearish at the upper line, bullish at the lower line.
  3. A bar closes beyond the trigger.
  4. Price does not come back to the trigger.
  5. Price reaches the other line.

Each example passes all five steps on real data. A 3 starts each formation.

Weekly: a 2d-2u at the lower line

XLF week bars, real data. The 3 of week of Aug 7 starts a broadening formation. 2d-2u at the lower line, trigger 32.365. The week of week of Oct 30 closes above the trigger at 33.78. Price does not trade back to 32.365 (closest: 33.46) and reaches the upper line at 35.78 (week of Nov 27).XLF · week bars · Jul 10 to Dec 1, 2023 · real data (Alpaca SIP)BF line, drawn right to left from the newest high or lowold line (replaced)trigger 32.365WEEK323436AugSepOctNov3: the formation starts2d-2u at the lower linecloses above the trigger: 33.78never back to 32.365other side: 35.78continuityQMWFTFC up: Q M W all greenA 3 starts the formation. Each new high or low redraws its line, right to left.The 3 (week of Aug 7) draws both lines.Price reaches the lower line. Trigger: 32.365.2d-2u at the lower line: price takes 32.365.The week closes above the trigger.Price does not come back to 32.365.Price reaches the upper line: the other side.TheStrat.AI
XLF, week bars, Jul 10 – Dec 1 2023, real data (Alpaca SIP), built from the daily bars.

The week of Oct 23 makes a new low at the lower line. The next week takes its high, 32.365 (a 2d-2u), and closes at 33.78. Quarter, month and week are green. The lows stay above 33.46. The week of Nov 27 reaches the upper line, 35.78.

Daily: a 2u-2d at the upper line

MSFT day bars, real data. The 3 of May 14 starts a broadening formation. 2u-2d at the upper line, trigger 458.27. The day of Jun 2 closes under the trigger at 441.31. Price does not trade back to 458.27 (closest: 440.39) and reaches the lower line at 398.33 (Jun 9).MSFT · day bars · May 8 to Jun 9, 2026 · real data (Alpaca SIP)BF line, drawn right to left from the newest high or lowold line (replaced)trigger 458.27DAY400420440460Jun3: the formation starts2u-2d at the upper linecloses under the trigger: 441.31never back to 458.27other side: 398.33continuityMWDFTFC down: M W D all redA 3 starts the formation. Each new high or low redraws its line, right to left.The 3 (May 14) draws both lines.Price reaches the upper line. Trigger: 458.27.2u-2d at the upper line: price takes 458.27.The day closes under the trigger.Price does not come back to 458.27.Price reaches the lower line: the other side.TheStrat.AI
MSFT, day bars, May 8 – Jun 9 2026, real data (Alpaca SIP).

Jun 1 makes a new high at the upper line. Jun 2 takes its low, 458.27 (a 2u-2d), and closes at 441.31. Month, week and day are red. The highs stay under 440.39. Jun 9 reaches the lower line, 398.33.

Daily: a 2d-2u at the lower line

XLB day bars, real data. The 3 of May 1 starts a broadening formation. 2d-2u at the lower line, trigger 52.975. The day of Jun 3 closes above the trigger at 54.41. Price does not trade back to 52.975 (closest: 54.68) and reaches the upper line at 57.79 (Jun 7).XLB · day bars · Apr 25 to Jun 7, 2019 · real data (Alpaca SIP)BF line, drawn right to left from the newest high or lowold line (replaced)trigger 52.975DAY52545658MayJun3: the formation starts2d-2u at the lower linecloses above the trigger: 54.41never back to 52.975other side: 57.79continuityMWDFTFC up: M W D all greenA 3 starts the formation. Each new high or low redraws its line, right to left.The 3 (May 1) draws both lines.Price reaches the lower line. Trigger: 52.975.2d-2u at the lower line: price takes 52.975.The day closes above the trigger.Price does not come back to 52.975.Price reaches the upper line: the other side.TheStrat.AI
XLB, day bars, Apr 25 – Jun 7 2019, real data (Alpaca SIP).

May 31 makes a new low at the lower line. Jun 3 takes its high, 52.975, and closes at 54.41. Month, week and day are green. The lows stay above 54.68. Jun 7 reaches the upper line, 57.79.

60-minute: a 3-2d at the upper line

XLE 60 minute bars, real data. The 3 of May 30 09:30 starts a broadening formation. 3-2d at the upper line, trigger 92.45. The 60-minute bar of Jun 3 09:30 closes under the trigger at 91.38. Price does not trade back to 92.45 (closest: 91.60) and reaches the lower line at 90.37 (Jun 3 12:30).XLE · 60 minute bars · May 29 to Jun 3, 2024 · real data (Alpaca SIP)BF line, drawn right to left from the newest high or lowold line (replaced)trigger 92.4560 MINUTE90919293May 30May 31Jun 33: the formation starts3-2d at the upper linecloses under the trigger: 91.38never back to 92.45other side: 90.37continuityMWD60FTFC down: M W D 60 all redA 3 starts the formation. Each new high or low redraws its line, right to left.The 3 (May 30 09:30) draws both lines.Price reaches the upper line. Trigger: 92.45.3-2d at the upper line: price takes 92.45.The 60-minute bar closes under the trigger.Price does not come back to 92.45.Price reaches the lower line: the other side.TheStrat.AI
XLE, 60-minute bars, May 29 – Jun 3 2024, real data (Alpaca SIP), built from the 30-minute bars.

The last 60 of May 31 is a 3 at the upper line. The first 60 of June takes its low, 92.45 (a 3-2d), and closes at 91.38. The highs stay under 91.60. Three bars later, price reaches the lower line, 90.37.

Lower-timeframe signals change higher-timeframe colors. The first 60 of June trades under the open. The new month, week and day turn red.

Putting it together

  • Map: the broadening formation. The other line is the target.
  • Evidence: continuity. More timeframes aligned, more evidence. Red gets redder: to drop 10%, a bar must drop 5% first.
  • Timing: the signal. Price is fractal: a lower-timeframe signal times the higher-timeframe move.
  • Cascade: broadening formations form in series, in the direction of the higher timeframe. Each new one carries more continuity evidence.
  • Target: out of the lower-timeframe formation, its chop (corrective activity) is not the trade. Aim at the higher-timeframe target.

Related: Full Timeframe Continuity · Actionable Signals · Price Discovery & Broadening Formations · Signals + Signals · Signals + Broadening Formations · Corrective Activity
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TheStrat was developed by Rob Smith. These docs are written by Alex Sopa (AlexsOptions) and quote his teaching. Work in progress: spotted an error? Tell Alex.

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