Chart Patterns

[Joules MM1]

The question is what is it that your looking for in a chart pattern.


What constitutes a pattern

...Wysiwyg is right a great topic
One which AI first started.

indeed, the next questions are what phase is that pattern in, what is the context and size, how does it relate to when and where it has printed, was there a similar one in a similar phase for that instrument that can be used as an analogue, what are the boundaries, what is the activity at the boundary that confirms the pattern (that is the transaction and/or what part of the transaction) or confirms an exit is required

not your daddy's market

 

[Joules MM1]

What constitutes a pattern

once this question is broken down and correctly/appropriately answered for the trader technique, then, the value of any pattern idea can be seen......however, this is crucial, the technique of trade must be proven prior to pattern search because technique is prior-to patterns

i think most traders eventually find that most patterns (if not all) fall away from there point of view yet remain a sense of confidence behind, post the technique application

in general most patterns will only serve as a footprint of observation, unless, and this only serves my opinion, if that pattern size, shape and context is inferior in size to the trade size or range being used at that time, in other words, if a trade time frame is larger than the time frame used for observation of smaller patterns that might fit a trend (for example) then that is different in that it is building evidence for the trader to stay or may signal to scale either way it, again, may provide context of a structure whether in an endogenous trend drive or in a large range within a consolidation

 

[tech/a]

Hang on this is supposed to be easy!

 

[Joules MM1]

most traders think of patterns in an aggressive manner, they are looking to use those patterns as an edge

a blunt edge, maybe, but, think on this; 2 things, most pro traders are looking for levels that directly apply to price entry or exit and there is not a pattern that has not already been seen by someone

so if price levels relate directly to price how far away is the relationship of a pattern to price?

if someone has already seen the pattern many times before you have, then, how do you know that that pattern boundary is not being used against you, again, if technique surrounding the pattern is superior to the pattern idea itself then the technique does not need a pattern

ideas

 

[Joules MM1]

Hang on this is supposed to be easy!

got some bad news for you:

when Joe installed the coffee machine i hid it from you.....and drank. every. last. drop

 

[tech/a]

That’s fine I don’t drink coffee.

I’d do like reading charts

 

[Joules MM1]

what other "patterns" might confirm chart patterns, or, can we say a series of trade units (in this instance days) that produce a pattern, not like a wedge n such but like a discernible pattern and is similar to what we generically call patterns

can we say in this series of representational patterns:
that we see o/s money flows within the 13 week due to falling AUD against the USD (mostly) for undervalued yielding large cap aussie stocks combined with reflexive retail/managed money exiting in the nearterm thru the 21 day money flow lens

would we see a pattern of units as a divergence (longs only)

in some way this type of patterning, of repetition, has benefit, if only to say 'it aint obvious' that i'm right
and in this instance maybe this would be fair to say short term money is exiting by the patterns represented and the risk part is the longer term money is still piling in, keeping in mind that any decline within these two instruments on rising USD against the AUD only makes the value look that much more enticing .....this highlights, if nothing else, that context and relative size have value



a typical pattern seeker in the larger time frame would be looking for an inverted right shoulder, a bullish idea......so this highlights a big big problem with pattern recognition: time
which equals: elevated risk

so let's say we go with the inverted head n shoulders idea, it's a long time to wait for the play to print, we dont even know if the idea will pan out...tic toc tic toc....the pattern begins to play out, but how deep, how do we know the pattern is confirmed, tic toc tic toc, oh, looks like the pattern is confirmed, how far away is the uncle point where we say uh-oh mashed that one and we are forced to exit, how wide is that price risk getting?

by the time a trader has spotted a pattern, confirmed the pattern and taken action, by that exercise, the trader has created risk, that is, the risk is wider than by using an orthodox trade technique because time usually continues to shift risk as the pattern unfurls...... the longer you take on deciding to tackle that 190cm full forward the more time he/she has of sizing you up and dropping one shoulder while side-stepping off the other foot

ideas (some parts of your daddys market never change)

 

[Wysiwyg]

Hang on this is supposed to be easy!

It should be kept simple. Identify a pattern, select an entry point/s, manage the position/select an exit point. Best way to show is do a right hand edge of chart example.

 

[tech/a]

Go ahead make your chart

 

[Wysiwyg]

Okay. So LVT is the code and it is a software company that is lightly traded.

Pattern = Symmetrical Triangle (pause in up trend)
Buy price = 41.5cents or better Open price Monday 14th May
Number of shares = 20000
Brokerage = $9.50
Stop Loss = 39 cents ($519)
Move Stop Loss = 44 cents when/if breakout up occurs
Take Profit = Sell 10000 close price less than 2* ATR(30) trailing stop & 10000 with 3* ATR(30) trailing stop (next day) or Sell all on a vigour bar of greater than 20% (next day)

 

[CanOz]

I prefer a consolidation pattern close to the highs or low, that one retraced a bit much for my liking...

 

[CanOz]

I love how the market consolidates and traps participants....then extends and cleans them out...then does it all over again....great patterns in all time frames.

 

[CanOz]

More patterns on a very fast time frame, basically every tick. You can see a pattern of absorption into resting bids just before a news announcement....

 

[Wysiwyg]

More patterns on a very fast time frame, basically every tick. You can see a pattern of absorption into resting bids just before a news announcement....

Is that BookMap through NinjaTrader with the use of a DOM ladder?

 

[CanOz]

Is that BookMap through NinjaTrader with the use of a DOM ladder?

It’s Auction Vista from the Jigsaw Dom.

 

[tech/a]

I prefer a consolidation pattern close to the highs or low

There is a great deal I agree with in both Can Oz and Joules postings.
Both go back a long way in chart analysis.

We all develop our own way of recognizing what we believe to be opportunity.
I look for
Squares and diagonals.
Volume pattern
The best setups are very clear

Here is one playing out now.

 

[Wysiwyg]

Okay. So LVT is the code and it is a software company that is lightly traded.

Pattern = Symmetrical Triangle (pause in up trend)
Buy price = 41.5cents or better Open price Monday 14th May
Number of shares = 20000
Brokerage = $9.50
Stop Loss = 39 cents ($519)
Move Stop Loss = 44 cents when/if breakout up occurs
Take Profit = Sell 10000 close price less than 2* ATR(30) trailing stop & 10000 with 3* ATR(30) trailing stop (next day) or Sell all on a vigour bar of greater than 20% (next day)

41.5cents is available so the position is now open.

 

[tech/a]

There is a great deal I agree with in both Can Oz and Joules postings.
Both go back a long way in chart analysis.

We all develop our own way of recognizing what we believe to be opportunity.
I look for
Squares and diagonals.
Volume pattern
The best setups are very clear

Here is one playing out now.

View attachment 87340

Just on these small caps.
Volume is thin and should be considered.
Having said that when they go volume can follow.
I ALWAYS have a buy price outside and above the pattern
Patterns can and do collapse and when they do---NEXT!
Or in a case like LVT at a bottom of the range.

LVT by the way is to me not a pattern Id entertain as a trade.
We are all different and see different things.

 

[Wysiwyg]

I prefer a consolidation pattern close to the highs or low, that one retraced a bit much for my liking...

You're right CanOz.

 

[CanOz]

why, what happened?