(FTD) Follow-Through Day Signal

Follow-Through Day (FTD) Signal

This indicator detects potential Follow-Through Days (FTDs) — a concept popularized by William O’Neil — to help identify possible market trend confirmations.
A Follow-Through Day occurs when an index shows strong upside action on higher volume several days after a market low, suggesting institutional buying rather than short covering.

How it works:

The indicator checks for a session where the price gains a defined minimum percentage from the prior close (default: 1.2% or more).

Volume must be greater than the previous day’s volume.

The rally must occur at least three days after a recent low, determined by the lookback period (default: 20 days).

Additional safeguards require that recent bars are not making new lows and that the bar three days prior either closed positive or was not at a new low — filtering out false signals from oversold bounces.

When all conditions are met, a blue up arrow is plotted beneath the bar, and an optional “FTD” label appears if enabled.

Inputs:

Min % Gain from Previous Close (%): Sets the minimum daily percentage gain to qualify as a Follow-Through Day.

Lookback Period for Lowest Low Checks: Defines how many bars back to search for a recent market low (default: 20).

Show Signal Label: Toggles the on-chart “FTD” label display.

Usage:
This indicator is intended for use on daily charts of major market indexes — such as the Nasdaq Composite (symbol: IXIC) or broad index ETFs including QQQ, SPY, and DIA — where Follow-Through Day signals are most relevant for confirming potential trend reversals.