ITW Signals BUY On 2 Hour Chart

The Technical Analysis

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Published: September 9, 2021 at 04:20 PM EDT

On September 8, 2021, Illinois Tool Works Inc stock (ITW) achieved a BUY signal on 6 of our proprietary algorithms indicating near-term upward movement for ITW. Based on historically similar occurrences, the likelihood of this near-term movement is very high. Although this analysis may be technical, it clearly lays out targets for pending price action for ITW. The chart of all potential movement is at the bottom of this article.

Algorithm Version 1

This algorithm determines overbought and oversold conditions based on four criteria occurring at exactly the same time. Each condition is rare to occur by themselves, the frequency of them all occurring at the same time is quite rare. The SAG Gauge discussed below is built into this algorithm and it will occur at the same time this algorithm triggers a BUY or SELL signal.

Algorithm Version 1 BUY - ITW 2 Hour Chart Accuracy

This algorithm accurately identifies BUY points for ITW on 2 hour charts 100.0% of the time it signals. A successful signal means the equity price moves up at least 0.5% over the next 40 2 Hour bars. When the algorithm properly performs, success is seen at least 1 trading bars after the signal closing price with a median max gain occurring around 24 trading bars after the signal bar. Successful signals see average reversals of 4.909% from the signal bar closing price and median reversals of 4.042%. The equity reverses greater than two percent 82.353% of the time, greater than five percent 41.176% of the time, and moves beyond ten percent 5.882% of occurrences. The signal does not necessarily mean an immediate price reversal will occur. Price reversal is delayed 82.353% of the time. In these instances, the reversals do not obey the signal and begin sizable upward movement for an additional 1 to 5 bars after the triggering signal occurs. This delay can see the equity decline 0.349% to 1.589% beyond the signal closing price of 221.85.

Analysis Based on This Section

Based on the signal closing price of 221.85, the target price is between 229.01 and 234.86 over the next 13 to 31 bars after the signal. However, the equity may first decline toward a price in the range of 218.32 to 221.08 over the first 1 to 5 trading bars.

Algorithm Version 2

This algorithm determines overbought and oversold conditions similar to Version 1. This algorithm contains the same elements as Version 1 plus one more condition. This will signal at the same time as Version 1 and the SAG Gauge. All conditions are rare to occur by themselves, the frequency of them all occurring at the same time is even more rare than Version 1.

Algorithm Version 2 BUY - ITW 2 Hour Chart Accuracy

This algorithm accurately identifies BUY points for ITW on 2 hour charts 100.0% of the time it signals. A successful signal means the equity price moves up at least 0.5% over the next 40 2 Hour bars. When the algorithm properly performs, success is seen at least 3 trading bars after the signal closing price with a median max gain occurring around 23 trading bars after the signal bar. Successful signals see average reversals of 4.899% from the signal bar closing price and median reversals of 3.499%. The equity reverses greater than two percent 77.778% of the time, greater than five percent 33.333% of the time, and moves beyond ten percent 11.111% of occurrences. The signal does not necessarily mean an immediate price reversal will occur. Price reversal is delayed 77.778% of the time. In these instances, the reversals do not obey the signal and begin sizable upward movement for an additional 1 to 6 bars after the triggering signal occurs. This delay can see the equity decline 0.319% to 1.582% beyond the signal closing price of 221.85.

Analysis Based on This Section

Based on the signal closing price of 221.85, the target price is between 229.01 and 234.46 over the next 13 to 24 bars after the signal. However, the equity may first decline toward a price in the range of 218.34 to 221.14 over the first 1 to 6 trading bars.

Algorithm Version 3

This algorithm determines overbought and oversold conditions similar to Version 2. This algorithm contains the same elements as Version 1 plus an additional condition different from Version 2. This will signal at the same time as Version 1 and the SAG Gauge. All conditions are rare to occur by themselves, the frequency of them all occurring at the same time is even more infrequent than Version 1.

Algorithm Version 3 BUY - ITW 2 Hour Chart Accuracy

This algorithm accurately identifies BUY points for ITW on 2 hour charts 100.0% of the time it signals. A successful signal means the equity price moves up at least 0.5% over the next 40 2 Hour bars. When the algorithm properly performs, success is seen at least 3 trading bars after the signal closing price with a median max gain occurring around 22 trading bars after the signal bar. Successful signals see average reversals of 5.71% from the signal bar closing price and median reversals of 4.682%. The equity reverses greater than two percent 80.0% of the time, greater than five percent 50.0% of the time, and moves beyond ten percent 10.0% of occurrences. The signal does not necessarily mean an immediate price reversal will occur. Price reversal is delayed 70.0% of the time. In these instances, the reversals do not obey the signal and begin sizable upward movement for an additional 1 to 8 bars after the triggering signal occurs. This delay can see the equity decline 0.666% to 2.261% beyond the signal closing price of 221.85.

Analysis Based on This Section

Based on the signal closing price of 221.85, the target price is between 229.13 and 238.33 over the next 7 to 27 bars after the signal. However, the equity may first decline toward a price in the range of 216.83 to 220.37 over the first 1 to 8 trading bars.

SAG Gauge

This algorithm determines overbought and oversold conditions based on separate conditions all occurring at the same time. There are two buy and sell points for this algorithm. An aggressive signal occurs after a top or bottom is confirmed when technically reading the equity's chart. A conservative signal occurs after a 2-bar confirmation takes place. Aggressive signals can happen without conservative signals. Conservative signals only occur when an aggressive signal also occurs at the same time.

SAG Gauge Aggressive BUY - ITW 2 Hour Chart Accuracy

This algorithm accurately identifies BUY points for ITW on 2 hour charts 92.763% of the time it signals. A successful signal means the equity price moves up at least 0.5% over the next 40 2 Hour bars. When the algorithm properly performs, success is seen at least 1 trading bars after the signal closing price with a median max gain occurring around 26 trading bars after the signal bar. Successful signals see average reversals of 4.564% from the signal bar closing price and median reversals of 3.746%. The equity reverses greater than two percent 69.408% of the time, greater than five percent 32.566% of the time, and moves beyond ten percent 6.579% of occurrences. The signal does not necessarily mean an immediate price reversal will occur. Price reversal is delayed 83.882% of the time. In these instances, the reversals do not obey the signal and begin sizable upward movement for an additional 1 to 9 bars after the triggering signal occurs. This delay can see the equity decline 0.42% to 2.168% beyond the signal closing price of 221.85.

Analysis Based on This Section

Based on the signal closing price of 221.85, the target price is between 226.28 and 235.4 over the next 11 to 37 bars after the signal. However, the equity may first decline toward a price in the range of 217.04 to 220.92 over the first 1 to 9 trading bars.

SAG Gauge Conservative BUY - ITW 2 Hour Chart Accuracy

This algorithm accurately identifies BUY points for ITW on 2 hour charts 92.841% of the time it signals. A successful signal means the equity price moves up at least 0.5% over the next 40 2 Hour bars. When the algorithm properly performs, success is seen at least 1 trading bars after the signal closing price with a median max gain occurring around 26 trading bars after the signal bar. Successful signals see average reversals of 4.538% from the signal bar closing price and median reversals of 3.585%. The equity reverses greater than two percent 68.129% of the time, greater than five percent 32.564% of the time, and moves beyond ten percent 7.39% of occurrences. The signal does not necessarily mean an immediate price reversal will occur. Price reversal is delayed 85.45% of the time. In these instances, the reversals do not obey the signal and begin sizable upward movement for an additional 1 to 9 bars after the triggering signal occurs. This delay can see the equity decline 0.442% to 2.488% beyond the signal closing price of 221.85.

Analysis Based on This Section

Based on the signal closing price of 221.85, the target price is between 226.12 and 235.45 over the next 11 to 36 bars after the signal. However, the equity may first decline toward a price in the range of 216.33 to 220.87 over the first 1 to 9 trading bars.

Moving Average Convergence Divergence Extrema

This algorithm follows the common moving average convergence divergence (MACD). It signals a BUY when the largest negative divergences begin to reduce. It likewise signals a SELL when the largest positive divergences begin to reduce as well. There are additional factors required for an actual signal to remove false signals.

Moving Average Convergence Divergence Extrema BUY - ITW 2 Hour Chart Accuracy

This algorithm accurately identifies BUY points for ITW on 2 hour charts 93.531% of the time it signals. A successful signal means the equity price moves up at least 0.5% over the next 40 2 Hour bars. When the algorithm properly performs, success is seen at least 1 trading bars after the signal closing price with a median max gain occurring around 24 trading bars after the signal bar. Successful signals see average reversals of 4.368% from the signal bar closing price and median reversals of 3.406%. The equity reverses greater than two percent 68.881% of the time, greater than five percent 29.021% of the time, and moves beyond ten percent 7.517% of occurrences. The signal does not necessarily mean an immediate price reversal will occur. Price reversal is delayed 90.385% of the time. In these instances, the reversals do not obey the signal and begin sizable upward movement for an additional 2 to 9 bars after the triggering signal occurs. This delay can see the equity decline 0.439% to 2.252% beyond the signal closing price of 221.85.

Analysis Based on This Section

Based on the signal closing price of 221.85, the target price is between 226.13 and 234.48 over the next 12 to 37 bars after the signal. However, the equity may first decline toward a price in the range of 216.85 to 220.88 over the first 2 to 9 trading bars.

BONUS ANALYSIS

All six algorithms have simultaneously signaled a BUY on the two hour chart on six prior occasions. All instances saw the stock move up a minimum of 1.027%. The median move was 3.4747% while the average was 5.42%. The top occurred 16-27 trading bars after the signal bar with the average around 20 bars, and median at 22.5. The stock did not begin moving upward on four of the six occasions. The stock moved down after the signal for an average of 6 trading bars (~12 hours).

Analysis Based on This Section

The current image displays the stock having continued downward movement. The current bottom was a perfect bounce off normal median movement (the apex of the dotted line). This current bottom is also within the target zone based on the bonus analysis. The target top based on this additional analysis could see the stock move toward 229.15 near the close of trading on September 16, 2021. My overall signals are bearish for the month, but this could provide a brief upturn amid the otherwise forecasted downward movement.

Summarization of Data

Based on all of the historical datapoints, this analysis has settled on the most likely courses of movement. The red boxes in the image below indicate the likely location of a decline if the signal is not immediately accurate. The green boxes likely hold the extent of signal accuracy. The larger boxes contain all movements aligned with historical data. The smaller box is comprised of the likely half of the median historical data. In this instance, half of the historical data shows the stock may first move down between 216.945 and 220.90. This is the small red box. Likewise, half of the historical target end points finish in the smaller green box. In this instance, the target top is likely between 227.645 and 235.13.

Chart displaying Reversals and Targets for ITW

View this interactive chart on TradingView to see where the stock currently is for this idea.

DISCLOSURE: The algorithms and historical accuracy percentages mentioned in these articles are for reference only. Anything can happen in the future when it comes to market movement. Historical price action is not always indicative of future movement. Just because the signals may have a high degree of accuracy, they can always fail. Traders assume all risk to their assets when investing in short or long-term opportunities.

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