The Fairy Square is very simple in its concept. But in order to understand it you need to understand the Magic Box concept first. So, please study that step first. This Fairy Square concept is generally applicable to stocks in downtrend.
The Fairy Square is a square box setup. It may not look exactly a square because of chart size, and other parameters used for graphing using Stockcharts or other graphing method. For simplicity use overlay for volume and setup Aroons immediately below the price chart. A square consist of four sides. Let us start with bottom of square, the base, the very foundation of Fairy Square. This base is formed by drawing a line from the latest Aroon Down 87.5 of a Magic box (Point 1) to Aroon Down 87.5 of immediate previous Magic Box (Point 2). Next, the left side of square is formed by drawing line from Point 2 up to Median line of Bollinger Band (Point 3) and the right side of box is formed by drawing line from Point 1 up, and same length as left side reaching to (point 4). And finally the top is formed by connecting point 3 to point 4. There is your Fairy Square and, the trend reversal that usually comes with it. The two Magic Box setups are the key.
On the attached annotated chart, you will see that the base of the Fairy Square begins and ends from these dates: May 18th (point 2) to June 8th (point 1). The other three sides are formed following method outlined above. What you are looking for is the Upper Bollinger Band piercing the Fairy Square through the topside of Fairy Square (Point 5). If it does pierce, then there is strong possibility that a trend reversal to the upside is near. Wait for the latest Magic Box confirmation (see Magic Box write-up), i.e. keep an eye on the Williams%R buy confirmation on the latest Magic Box. So often the Upper Bollinger Band will continue to fall, even when the stock is beginning to rise. Good luck and God bless.
Trading: It is highly recommended that you paper trade the system to familiarize yourself with it thoroughly. As with anything in life nothing is guaranteed, so, always use appropriate stop loss according to your risk tolerance.
Research by Kenneth J. Goodrich Annotations by Donstradamus
Good stocks are obvious. Extensive DD is how you convince yourself to buy a bad one.