Trading CD Leg of Harmonic Pattern: 7.77:1 Long ALOGUSD (1h)
L I N E - W O R K : The foregoing, and more, populate my Object Tree, which is summarized as a separate item, below. Any line or drawing tool that I use frequently is saved as a color-coded template for rapid repetition.
Fib Space - A concrete Leading Indicator comprising several overlapping Fibonacci Trend-Based Extensions and a Retracement or two. Rather than to find Support & Resistance, its purpose is to target Volatility as the areas between highlighted zones.
AVWAP Array - A fluid Leading Indicator comprising several overlapping Anchored VWAPs, as well as some some standard and nonstandard deviations and anchor-points. Although Price itself behaves violently when interacting either with VWAPs, experience shows that the crossing of key VWAPs is a Leading Indicator of high Volatility.
In this case, further line-work includes one of the Pitchforks implied by the right wing of the pattern, and a section of a larger bulls arrow consequent to a larger Bullish Harmonic Reversal Pattern that does not fit within the hourly chart
. . . . . . . . . . . .
V O L U M E : The various horizontal histograms of volume simply indicate accumulation and distribution. Volume Profiles, however, serve two purposes. 1) As a Lagging Indicator, to discover ranges of Supply & Demand, and the all-important Mean, and 2) as a Leading Indicator to corroborate entries, profit targets and stop-losses, as well as any discretionary management of the latter, if needed. None of these are as useful as the custom construction in my Object Tree under the name AWAP Array.
In this case, Volume has been healthy partially due to the ongoing FTX Crash (as of this writing), and ALGO tends to have high Volume in general, making it a good indicator of the health of the sector. A recent spike in selling has dropped price into the C-Point of the pattern which, for those less familiar with them, is NOT considered complete until confirmation of the D-Point.
. . . . . . . . . . . .
V O L A T I L I T Y : This is the least understood of the the three fundamental axes of trading, or at least of my style. In any timeframe, price rises more slowly than it falls, which is to say that Volatility is the opposite of price variation. To see Volatility with any hope of clarity, it is essential to remove innate directional bias. In general, it rises sharply and declines slowly. The Question, even more than HOW FAR?, is WHEN? The mystery of Volatility tests, and rewards, patience.
Generally and in this case, too, the greatest Volatility occurred at the X-Point, which coincides approximately with the two-tone Green VWAP and the midpoint between the price drop begun near the two-tone Red VWAP and the bottom of that swing, at the A-Point. As expected, there is a rise leading into the midpoint of the pattern (B), which is also the second highest price (so far). Another peak in Volatility may be expected at point D, if it is reached.
. . . . . . . . . . . .
T R E N D - E X H A U S T I O N : In order to maximize the Risk:Reward ratio, one must act at the edges, or as close as possible. Therefore, one needs an improving sense of where the potential for reversal is highest BEFORE price reaches it. Like Volatility, and unlike Volume, it is impossible to measure directly, and yet with clean Line-Work and a sound market narrative, or trade thesis, various containment and decomposition techniques exist to estimate probable areas in a chart where price vectors will reverse.
In this case, a Pitchfork is implied by interwoven patterns, among other evidence. Although the Price Action in the near term may be described by it, a larger Bullish Reversal Pattern (to large for the hourly chart) appears to have completed as well, implying an even larger set of Pitchforks.
. . . . . . . . . . . .
H A R M O N I C S : Whether by definition or analogy, harmony implies cooperation between two or more agents. To draw X5 patterns without understanding which elements one seeks to reconcile is like a chimpanzee playing with an iPad. When I draw them, I visualize the interplay of 1) the Range between Supply & Demand, 2) the Volume Spread and 3) Probability over Time.
In this case, in addition to the much larger (green) Bullish pattern completing, a smaller such pattern can be seen in the (red) Bearish Reversal Pattern whose CD Leg comprises the vector of the trade. In effect, the trade can also be seen as the AD Retracement of the smaller Harmonic Bull, since it coincides with the ABC Fib-Based Trend Extension.
. . . . . . . . . . . .
F O R E C A S T : Trading the CD Leg of a Reversal Pattern is technically premature, and risky. In this case, not only the coincidence of the Fib ratios but several factors of the Big Picture, as well as the Indicators make this a decent proposition. As always, there is a point (orange) between 1/2 and 2/3 up the vector when it will be tested (and where it tends to fail, if it does fail) therefore some profit may taken along the way. Considering the high R:R Ratio and the duration of the swing, it’s not a bad idea to de-risk.
_____________________________________________________________________
O B J E C T - T R E E :
The most overlooked tool in Tradingview is the Object Tree. When cleverly rooted, it enables the chartist to arrange (i.e layer) the Drawings and Indicators (if any) and then selectively toggle them on and off.
I am sometimes asked about my suite of indicators, which I have listed below, per the order in which they are layered. (The settings I use are beyond the present scope.) A more relevant detail is that the major Volatility Indicators are placed in the upper windows while those which measure Volume appear in windows below the price action.
In the main window, the preference is inverted. Any original Line-Work that I might create is collected beneath all (12) Indicators.
Again, the purpose of this groundwork to deliberately overlap objects and to selectively turn them on or off like light bulbs in order to discover and/or important but not obvious facts about the potential action space.
. . . . . . . . . . . .
Tesla Coil ML
____________________________________
Average Volatility Movement
____________________________________
Buying & Selling Pressure
Average True Range (Line)
Average True Range (Histogram)
____________________________________
ALGOUSD (1h)
Indicators VSA v6
Volume Pressure Analysis
Time Segmented Volume Bands
Visible Range Volume Profile
Periodic Volume Profile
Daily High/Low/Mid/Open/Close+Weekly/Monthly Open
Volatility Stop MTF
Volatility Bands by DGT
Double SuperTrend ATR
Moving Average Shaded Fill Area Crossover EMA
Moving Average Ribbon
>📁”Object Group 1”
>📁”Object Group 2”
>📁”etc.”
____________________________________
Time Segmented Volume Bands
____________________________________
Heatmap Volume
Volume Analysis
Time Segmented Volume Bands
. . . . . . . . . . . .
R E M A R K S : I will attempt to post updates, and a larger, higher timeframe view of the position, suggesting a major reversal for Algorand (for reasons beyond the scope of the chart alone).
🧸
Fib Space - A concrete Leading Indicator comprising several overlapping Fibonacci Trend-Based Extensions and a Retracement or two. Rather than to find Support & Resistance, its purpose is to target Volatility as the areas between highlighted zones.
AVWAP Array - A fluid Leading Indicator comprising several overlapping Anchored VWAPs, as well as some some standard and nonstandard deviations and anchor-points. Although Price itself behaves violently when interacting either with VWAPs, experience shows that the crossing of key VWAPs is a Leading Indicator of high Volatility.
In this case, further line-work includes one of the Pitchforks implied by the right wing of the pattern, and a section of a larger bulls arrow consequent to a larger Bullish Harmonic Reversal Pattern that does not fit within the hourly chart
. . . . . . . . . . . .
V O L U M E : The various horizontal histograms of volume simply indicate accumulation and distribution. Volume Profiles, however, serve two purposes. 1) As a Lagging Indicator, to discover ranges of Supply & Demand, and the all-important Mean, and 2) as a Leading Indicator to corroborate entries, profit targets and stop-losses, as well as any discretionary management of the latter, if needed. None of these are as useful as the custom construction in my Object Tree under the name AWAP Array.
In this case, Volume has been healthy partially due to the ongoing FTX Crash (as of this writing), and ALGO tends to have high Volume in general, making it a good indicator of the health of the sector. A recent spike in selling has dropped price into the C-Point of the pattern which, for those less familiar with them, is NOT considered complete until confirmation of the D-Point.
. . . . . . . . . . . .
V O L A T I L I T Y : This is the least understood of the the three fundamental axes of trading, or at least of my style. In any timeframe, price rises more slowly than it falls, which is to say that Volatility is the opposite of price variation. To see Volatility with any hope of clarity, it is essential to remove innate directional bias. In general, it rises sharply and declines slowly. The Question, even more than HOW FAR?, is WHEN? The mystery of Volatility tests, and rewards, patience.
Generally and in this case, too, the greatest Volatility occurred at the X-Point, which coincides approximately with the two-tone Green VWAP and the midpoint between the price drop begun near the two-tone Red VWAP and the bottom of that swing, at the A-Point. As expected, there is a rise leading into the midpoint of the pattern (B), which is also the second highest price (so far). Another peak in Volatility may be expected at point D, if it is reached.
. . . . . . . . . . . .
T R E N D - E X H A U S T I O N : In order to maximize the Risk:Reward ratio, one must act at the edges, or as close as possible. Therefore, one needs an improving sense of where the potential for reversal is highest BEFORE price reaches it. Like Volatility, and unlike Volume, it is impossible to measure directly, and yet with clean Line-Work and a sound market narrative, or trade thesis, various containment and decomposition techniques exist to estimate probable areas in a chart where price vectors will reverse.
In this case, a Pitchfork is implied by interwoven patterns, among other evidence. Although the Price Action in the near term may be described by it, a larger Bullish Reversal Pattern (to large for the hourly chart) appears to have completed as well, implying an even larger set of Pitchforks.
. . . . . . . . . . . .
H A R M O N I C S : Whether by definition or analogy, harmony implies cooperation between two or more agents. To draw X5 patterns without understanding which elements one seeks to reconcile is like a chimpanzee playing with an iPad. When I draw them, I visualize the interplay of 1) the Range between Supply & Demand, 2) the Volume Spread and 3) Probability over Time.
In this case, in addition to the much larger (green) Bullish pattern completing, a smaller such pattern can be seen in the (red) Bearish Reversal Pattern whose CD Leg comprises the vector of the trade. In effect, the trade can also be seen as the AD Retracement of the smaller Harmonic Bull, since it coincides with the ABC Fib-Based Trend Extension.
. . . . . . . . . . . .
F O R E C A S T : Trading the CD Leg of a Reversal Pattern is technically premature, and risky. In this case, not only the coincidence of the Fib ratios but several factors of the Big Picture, as well as the Indicators make this a decent proposition. As always, there is a point (orange) between 1/2 and 2/3 up the vector when it will be tested (and where it tends to fail, if it does fail) therefore some profit may taken along the way. Considering the high R:R Ratio and the duration of the swing, it’s not a bad idea to de-risk.
_____________________________________________________________________
O B J E C T - T R E E :
The most overlooked tool in Tradingview is the Object Tree. When cleverly rooted, it enables the chartist to arrange (i.e layer) the Drawings and Indicators (if any) and then selectively toggle them on and off.
I am sometimes asked about my suite of indicators, which I have listed below, per the order in which they are layered. (The settings I use are beyond the present scope.) A more relevant detail is that the major Volatility Indicators are placed in the upper windows while those which measure Volume appear in windows below the price action.
In the main window, the preference is inverted. Any original Line-Work that I might create is collected beneath all (12) Indicators.
Again, the purpose of this groundwork to deliberately overlap objects and to selectively turn them on or off like light bulbs in order to discover and/or important but not obvious facts about the potential action space.
. . . . . . . . . . . .
Tesla Coil ML
____________________________________
Average Volatility Movement
____________________________________
Buying & Selling Pressure
Average True Range (Line)
Average True Range (Histogram)
____________________________________
ALGOUSD (1h)
Indicators VSA v6
Volume Pressure Analysis
Time Segmented Volume Bands
Visible Range Volume Profile
Periodic Volume Profile
Daily High/Low/Mid/Open/Close+Weekly/Monthly Open
Volatility Stop MTF
Volatility Bands by DGT
Double SuperTrend ATR
Moving Average Shaded Fill Area Crossover EMA
Moving Average Ribbon
>📁”Object Group 1”
>📁”Object Group 2”
>📁”etc.”
____________________________________
Time Segmented Volume Bands
____________________________________
Heatmap Volume
Volume Analysis
Time Segmented Volume Bands
. . . . . . . . . . . .
R E M A R K S : I will attempt to post updates, and a larger, higher timeframe view of the position, suggesting a major reversal for Algorand (for reasons beyond the scope of the chart alone).
🧸
Adrian Dyer,
Chief Strategist and Impresario at The Leading Indicator
Chief Strategist and Impresario at The Leading Indicator