back to the basics …
a very good friend of mine has sought my assistance in becoming a pattern recognition guru. I do this very sparingly because before I ever accept this challenge and privilege I make sure they have read http://www.constructingtheuniverse.com/bookinfo.htm. Why? Because the PATTERNS fly against the convention of any modern portfolio theory, CNBC talking head pundit and, quite frankly, many noted technicians. Flush the brain, find a pattern and take the trade ….
so, in a nutshell it comes down to 3 things : Project, Extend, Retrace.
PROJECT – the basic (no less important) is ab=cd. (shown below)
EXTEND: from the b point EXTEND based on the bc leg UP (or down) into the ab=cd region by 127%, 141.2%, or 161.8%.
RETRACE: Xa retrace by .618 or .707 or .786.
Where they come together … a PATTERN is formed and you take the trade.
That is ALL you will EVER need to know …
Below is the JPY 120 minute SELL pattern at/around 103.09-103.30
Make it a great weekend.