That looks more like an Inverted H&S to me. HS and IHS are pretty reliable pattern, even on tick charts.
It's the Pattern, Stupid!
- Thread starter schizo
- Start date
I was comparing this portion of the chart to his pattern.
I think it's a potential reversal pattern, similar to a H&S. Time needs to be taken into context. For instance, with the corkscrew topping pattern, longs are trapped after the initial and sudden drop from the highs. So the longer it takes without a resumption of the former highs (elongated right side), the more anxious they become. The uptrend was the status quo, and at first the bears are cautious, but the abruptness of the initial move persists in their thinking and there is a gradual drip feed of sell orders that eventually overwhelms the buy orders. The bulls attempt to resume the uptrend but ultimately fail.
I think I'm moving into "full speed ahead" BS territory now.
You did ask!
Edit: changed the wording, I meant the first of the two corkscrews:
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If you wrote the above in reference to the Dow Reversal Pattern I posted, these are two different subjects. While Dow Theory centers on market direction as a whole, that reversal pattern can be used alone as an indication of a reversal of any time frame down to the tick level and can be used in day trading. Different from the confirmation of the averages in Dow Theory, that pattern contains its own confirmation based on Dow Theory.
I strongly disagree.
The Dow Theory reversal pattern is something someone came up with that intentionally decided it can be used as stand alone without the context of the Dow Theory while tagging the name "Dow Theory" to the pattern.
Simply, it can not be used alone as an indication of a reversal considering the Dow Theory is the context.
Meant, you can "try" to use it alone but do such knowing it was not designed as such. Therefore, its application is wrong as such. Seriously, do you want to put your hard earned money on something that's intentionally being used the wrong way let alone spend your time learning it as such...the wrong way ?
Heck, there's a price action pattern called "FOMC Rate Announcement" that the forex trader states has no association to FOMC announcements and that it can be used stand alone as a trend continuation pattern.
Yeah, whatever.
P.S. Nothing wrong with changing something from it original designed. Just do such knowing what you're doing with the knowledge a lot of important information is now missing.
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1) For the sake of simplicity, let me state that you can exit your trade when the pattern fails to materialize.
2) True, not all patterns will work on every futures and equity markets. But they all, for the most part, tend to show that certain patterns like Double Top or Double Bottom will work everytime. However, being able to spot these patterns in real time is the essence.
3) Nevertheless, one should always adhere to the principle of risk management.
Wrb sees a bazillion different aspects in trading. No thread would ever go anywhere if you tried to cover all he suggests. In reality, there are only three key aspects:
When do you enter a trade? (Entry strategy)
How much do you enter a trade? (Position sizing)
When do you exit the trade? (Exit strategy)
This thread focuses on the timing aspects (entry strategies and exit strategies). The position sizing should be left to the Risk Management forum.
My particular focus is on trend trading. Trend is the ultimate pattern in trading IMO.
My metastrategy : "Trade with The Trend"
A thousand different ways to do this.
First you have to know what TREND is.
An oft suggested definition is "higher highs and higher lows" (an uptrend) or "lower highs and lower lows" (a downtrend).
It turns out this is the PA definition of trend ... pretty worthless for an indicator guy like moi (AFAICT).
Exactly.
Why have such a thread about how to enter and exit a particular pattern if entry/exit is not discussed about the pattern ?
That's why I think schizo (Op thread starter) is seeking beyond than just showing a chart with a name of the pattern. He wants to know how or where to enter a position in the chart pattern and where to exit that position in the same chart pattern.
That's why I mentioned the Hall of Fame threads. There's actual discussions about such...where to enter and exit particular patterns. In contrast, the current Elitetrader.com environment is more about description of the pattern...what it looks like and such. I think that's what schizo is trying to avoid because it has become very commonplace here at ET as of lately.
It is a reversal pattern that is based on the tenets of Dow Theory, thus the name Dow Theory Reversal Pattern.
I use it almost every day in tick charts, just as the Greeks could have used it at the end of their bull market.
Ni Hao! For me, they look like a channel play. I could easily draw a channel line and play off of that. Of course, this is easier said than done in hindsight. Anyway, I'll see about uploading your chart later with comments and lines drawn in.
I am not Chinese, and neither is the chart.
The point of posting those charts is to show the pattern in question.
A trend line can be drawn real time just as easily as in hindsight.
Bedtime, and goodnight.