Dragon pattern
- Thread starter Pekelo
- Start date
Hi Pek
First of all, good job! You did discover something very valuable and recurrent, so my hat goes off to you.
I have one question about this pattern:
By looking at your charts I noticed that sometimes the 2nd bottom is higher than the 1st bottom while other times it's lower.
According to your experience, what's better for the 2nd bottom?
If the dragon failure can be compared to a W or double-bottom failure, than the 2nd bottom should be higher or equal to the first bottom, or at least its close should be higher or equal.
If the 2nd bottom ticks and closes below the 1st bottom, I think it becomes too subjective and can be interpreted in a different way than double bottom or W pattern.
Perhaps it's worth taking a close look at how a higher 2nd bottom tends to perform vs a lower 2nd bottom.
Keep up the great work.
First of all, good job! You did discover something very valuable and recurrent, so my hat goes off to you.
I have one question about this pattern:
By looking at your charts I noticed that sometimes the 2nd bottom is higher than the 1st bottom while other times it's lower.
According to your experience, what's better for the 2nd bottom?
If the dragon failure can be compared to a W or double-bottom failure, than the 2nd bottom should be higher or equal to the first bottom, or at least its close should be higher or equal.
If the 2nd bottom ticks and closes below the 1st bottom, I think it becomes too subjective and can be interpreted in a different way than double bottom or W pattern.
Perhaps it's worth taking a close look at how a higher 2nd bottom tends to perform vs a lower 2nd bottom.
Keep up the great work.
Hi Pek
Another observation about this pattern:
it looks like the swing from 1st bottom to Height is much larger than the swing from Height to 2nd bottom...and the swing from 2nd bottom to Dragon Failure Point is the smallest swing of all.
In sequence, you'd have the following:
1st bottom to Height > Height to 2nd bottom > 2nd bottom to DFP
Is this correct?
Another observation about this pattern:
it looks like the swing from 1st bottom to Height is much larger than the swing from Height to 2nd bottom...and the swing from 2nd bottom to Dragon Failure Point is the smallest swing of all.
In sequence, you'd have the following:
1st bottom to Height > Height to 2nd bottom > 2nd bottom to DFP
Is this correct?
I haven't thought of it or noticed anything what we could use as a rule, but now that you asked, I will take a harder look.
Generally when the 2nd bottom is lower/higher and there is also an RSI divergence, that is a sign that there will be no Failure, because the W or M will play out. This is one of my favorite setups too, but again, that is not a dragon just a simple double bottom/top.
I promised this from last Friday. This is an excellent example when 2 dragons with different doubletops compliment each other, and give almost the same 3rd top although arriving it with different math:
Here is the first chart 5 mins, giving a 1071 3rd top, which was pretty much what happened:
Now the bigger dragon from the day before gave 1073 as 3rd top. We actually reached that, although not in RTH when ES reached 1068.75 (ES being 4 pts below the cash) before it closed for the weekend:
So we had 2 dragons, complimenting each other and both played off according to plan....The bigger dragon's Failure point at 1066 is the smaller dragon's middle point, where we count the Height.
Here is the first chart 5 mins, giving a 1071 3rd top, which was pretty much what happened:
Now the bigger dragon from the day before gave 1073 as 3rd top. We actually reached that, although not in RTH when ES reached 1068.75 (ES being 4 pts below the cash) before it closed for the weekend:
So we had 2 dragons, complimenting each other and both played off according to plan....The bigger dragon's Failure point at 1066 is the smaller dragon's middle point, where we count the Height.
I posted this on the ES Journal last Thursday, but it belongs here. Today we reached 1100 on the SPX.
Notice that the math is done where the Failure should have been at, and not at the actual Failure. (which was 12 pts higher)
Quote from Pekelo:
Here it is. Height is exactly 60 points, the Failure should have been at the SMA 1052-54 (had we gona down, it would have been lower than on this chart). So add 60 points to that. I say 1111 because that is a funny number, and close to 1052+60... If we make it up to 1115, still good in my book...
Notice that the math is done where the Failure should have been at, and not at the actual Failure. (which was 12 pts higher)
We have just formed a smaller DT at the 1100 SPX level. Since there is RSI convergence, there is a possibility of new high. If we start to drop, the Failure area is 1093-94 since the Height is 14 points to form a smaller dragon.
If the drop fails in that area and continues going higher the math is 1094+14=1108 as 3rd top, pretty close to the bigger dragon's 1111 top. We shall see...(it is like watching a baby being born)
If the drop fails in that area and continues going higher the math is 1094+14=1108 as 3rd top, pretty close to the bigger dragon's 1111 top. We shall see...(it is like watching a baby being born)