After one level falls, does the next one fall too? No.
After one level falls the next is not more likely to fall too; the continuation rate stays flat to slightly down as the walk goes further (35% -> 31% -> 31%).
Direction-pure walks only (a reversal closes the walk); the earlier reversal-permitting count and its 21-rung headline are withdrawn. Continuation rates beyond step 3 fall below the thin floor (n=25) and are not quoted.
Average walk length
Continuation rate
Out of every 100. The line marks 50.
The grid has nine price levels. A "walk" is what happens when price steps from one level to the very next one, then keeps going the same direction, rung after rung, until something breaks the chain – the grid resets, or price reverses.
We counted 359 of these walks, all of them holding to one direction the whole way through. Here's what they look like:
- 65% of walks stop after just one rung.
- 24% go exactly two rungs.
- 11% go three rungs or more, and the longest one on record ran 5 rungs.
- The average walk is about 1.5 rungs long.
We also checked the "continuation probability" – once a walk has already gone a certain number of rungs, what's the chance it goes one more, the same direction? If price had momentum once it got moving, this number should climb the further a walk has already traveled.
It doesn't climb. It's flat, if anything drifting down. After reaching rung 1, there's a 35% chance the walk continues to rung 2. After reaching rung 2, a 31% chance it continues to rung 3. After reaching rung 3, a 31% chance it continues to rung 4. Those last two numbers, 31.0% and 30.8%, are close enough that "flat" is the more honest word than "decaying" – but either way, there is no rising curve. Ladder walks do not build momentum.
A correction, stated for the record: an earlier version of this study allowed a walk to count as "continuing" even if price reversed direction partway through, as long as it kept stepping through the same levels. Under that looser rule, the numbers did climb sharply -- but that rise turned out to be an artifact of the counting rule, not a real property of the market: a walk that goes up, turns around, and comes back down through the same rungs kept racking up "continuations" that should have been counted as separate, shorter walks. That looser reading, and its "21 rungs" headline number, has been withdrawn. The numbers above are the corrected, direction-pure reading, and they are the ones that should be cited going forward.