What is major pattern?
by PRASHANT SHAH -
Differentiation between Fresh and Continuation signals is important irrespective of trading methodology. We discussed a basic P&F pattern trading method in the previous chapter. Like any other price-following method, period of Sideways or horizontal trend generate whipsaws with this method as well, but it is comparatively less, for reasons we discussed in the earlier chapter. ... Read more
Triple Top – Triple Bottom Pattern
by PRASHANT SHAH -
If high box-price of two consecutive columns of ‘X’ happens to be at the same level from which column has turned to ‘O’, then it becomes a strong resistance area. It displays strong supply area because three-box reversal has been produced from the same level twice. Similarly, if low box-price of two consecutive columns of ... Read more
Trap Pattern
by PRASHANT SHAH -
Trap Trap should be a familiar word to market participants. We fall prey to it often. Getting trapped can be simply defined as getting stuck in a trade that has moved against the entry. Double Top Buy is a bullish swing breakout formation. A column of ‘O’ may occur after such breakout which represents correction, ... Read more
Catapult
by PRASHANT SHAH -
Catapult is popular Point & Figure formation and considered as a reliable pattern from the trading perspective. Two consecutive patterns in the same direction form a Catapult, where a strong Buy signal is followed by Continuation Buy signal. Traditionally, a Triple Top Buy formation is considered as a strong Buy signal; when it is followed ... Read more
Summary
by PRASHANT SHAH -
It is interesting to know the candidates where breakout trades are in trouble. Such difficult period for trend-following is typically followed by a strong trending phase. Hence, Broadening and Double Broadening are interesting formations.The 100% Pole is a combination of three patterns and shows more bullishness or bearishness than High Pole and Low Pole.Bullish and ... Read more
Pattern Performance
by PRASHANT SHAH -
Backtesting Summary Though details can be analyzed and observed from the given tables, it appears from overall testing that multi-column breakout, Triangular and Broadening formation across instruments and time frames have a definitive edge. Strategies can be designed based on these formations for better results. Note that returns are shown in percentage terms and position-sizing ... Read more
