Profiting with Chart Patterns book
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- Figure 3-31.
| Figure 3-30.
Consolidation Pattern Consolidation Structure The following diagram illustrates the structure of the ideal Consolidation. There are several things to note about it. First, lets go to the very left of this illustration, where you have a low point. Consolidations always form from a prior move. You cannot just have a trading range in the middle of a chart somewhere and call it a Consolidation. You have to look to the left of the chart and see if you have a prior move from which the Consolidation came. In this example, we formed a low point, we rallied, formed the Consolidation, and finally broke out to the upside where it is labeled Long entry. Chapter 3 Definitions, Structures, & Examples © Nirvana Systems Inc. 3-31 Profiting with Chart Patterns Figure 3-31. Consolidation Structure Diagram Here is the reason Consolidations are so powerful. Measure the width of that range. What you will find is, if you go to the left of the chart the same width, moving the exact same distance to the left, you will almost always find a low point that same distance away. Now, take the width again and move to the right to find out where the target is. You will also find that Consolidation occurs in the center of the ultimate move. You can also go up twice the distance from that relative low that we found on the left to the center of the Consolidation to get the vertical distance to the target. Those two dimensions very accurately pinpoint where the chart is most likely going to go from that formation of Consolidation. In the following examples, I think you will see that this really does work and is an amazing, powerful, and trade-able pattern. If a Consolidation fails and goes in the opposite direction, that pattern is equally trade-able. The psychology of the market has suddenly shifted in the wrong direction and something is wrong with the chart. It should be shorted in this example. Chapter 3 Definitions, Structures, & Examples Profiting with Chart Patterns 3-32 nirvanasystems.com Yüklə 2,26 Mb. Dostları ilə paylaş:
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