When markets sell off hard, most traders panic. But for Barchart’s Senior Market Strategist John Rowland, that’s when he starts watching for opportunity.

“What I’m looking for is that picture of a crash — where selling overwhelms momentum,” John explained in his latest webinar. “Eventually, buyers are attracted to falling prices and sellers become satisfied. That’s where reversals begin.”

Instead of running from red candles, John uses them as road signs — and the Barchart 3-Day Bounce Screener is his favorite way to find them.

How the “3-Day Drop” Setup Works

John looks for stocks that have fallen for three consecutive sessions — what he calls a “cascading waterfall” pattern.

Here’s what he’s watching for:

• A sharp, 3-day selloff where momentum breaks down fast.
• Candles that show symmetry — small, medium, and then large red bars.
• Buyers stepping in after the final big drop, signaling exhaustion of selling pressure.
• A subsequent green candle close that confirms the reversal has started.

“This isn’t a selling opportunity,” John says. “It’s a buying opportunity, once we add some conditional evidence for confirmation.”

Using Barchart’s 3-Day Bounce Screener

To find these setups, go to:

👉 Investing Tab → Barchart Screeners → 3-Day Bounce

This tool highlights stocks showing bullish tendencies after short-term downtrends. John uses it to identify potential “crash-and-recover” setups and then tracks each candidate’s bounce using price targets (which he refers to as Target 1, 2, and 3).

“I’m not worried about Target 1 or 2 — I want to see a stock that looks like it’s about to take out Target 3,” John said. “When it breaks through those red-candle highs, that’s confirmation of momentum returning.”

Many of the candidates from the clip are smaller-cap or lower-volume names, which may often be the case during strong trending bull markets – but the pattern works on all timeframes and tickers, from large-caps to ETFs.

How Traders Can Apply It

1. Scan for Candidates: Use the 3-Day Bounce Screener to spot recent selloffs
2. Check the Chart: Look for that waterfall-style decline and the start of a green recovery candle
3. Identify Targets: Use the red candles from the drop to ID potential upside targets for the bounce
4. Confirm the Reversal: Combine this setup with RSI, momentum, or volume indicators to validate the move

Bonus Tip: Pair this strategy with John’s eMACD New Buy Signal Screener for early momentum confirmation.

Why It Works

This approach works because it’s built on behavioral logic — sellers exhaust themselves before buyers step back in.

That shift in balance often sparks short-term rallies, or even the start of larger trends.

As John put it:

“We’re not predicting the bottom — we’re watching the market tell us when selling is done.”

Watch this quick clip to see John’s explanation in action: 

The next time you see three red candles, remember, it’s not time to panic; it’s time to prepare for your next move. 

Secret Stock Screeners That Find Winning Trades Before They Happen

Learn how John uses three powerful screeners — eMACD, End of the Road, and 3-Day Bounce — to find setups before the crowd sees them.

• Watch the full webinar on John’s favorite stock screeners.
• Start screening now to find your next 3-Day Bounce trade on Barchart.