As I come across comments on the charts in which traders overlay simple geometries, I thought I should point out to the ones that have been most important in my experience, in terms of how reliable they have been.
THE STANDARD AB=CD PATTERN:
To start the enumeration of the most common ones, let's name the most obvious ones, the a-b = c-d symmetrical pattern.
In its most mundane form, the a-b = c-d represents a balancing of a geometric form in which the ab segment is reproduced following a shallower retracement in the order of 0.382 to 0.786 Fibonacci range. What ensues is simply a cut-and-paste version of the a-b segment into a c-d segment.
In the chart, you will see this in the large RED dashed figure.
REITERATION OF THE STANDARD AB=CD PATTERN:
While there is a possibility of reiteration of the ab segment into a c-d, then a e-f segment (see YELLOW pattern in the price field), this represents a lesser occurrence.
FIBONACCI CAN HELP MEASURE THE EXTENT OF THE PATTERN:
The type-A trader might be tempted to look for a perfect replication of a-b into c-d, but this is rarely the case, as the market will expand at its own whim. Be flexible and let the market breathe a little.
Still, the trader interested to keep a pulse on these development should remain on guard with such Fibonacci-paced extensions as 1.272, 1.414 and 1.618 x the b-c segment, or in the case of a reiteration, 1.272, 1.414 or 1.618 x d-e segment.
MOST RELIABLE SIMPLE GEOMETRY:
In my experience, most novice pattern traders have calibrated their visual cortices to scan for forward-moving price action, over which they draw a line and look for a symmetrical repetition, so as to decipher the all-too familiar a-b = c-d symmetrical pattern.
Instead, I recommend that you seek out not the FORE-ward, but instead the BACK-ward leaning price action. In this geometry, you will have to reverse your mind's eyes, looking for a symmetrical repetition in which the a-b = c-b segment is drawn lines leaning in reverse of the standard symmetrical a-b = c-d pattern.
This pattern has a name: The One2One (purple in the chat)
OVERALL:
In my experience, the completion of these symmetrical patterns are rarer, but accompanied by a most forceful price reaction upon completion of the reversed a-b = c-d geometry.
Think backward. Stay ahead.
David Alcindor Predictive Analysis & Forecasting Denver, Colorado - USA
Aside from charting like a mad man about 18hrs a day, my real focus over the years have been studying hidden, or occult, geometries in the financial markets.
Here, I thought to share an inkling of what one should consider looking for, especially in choppy, retracing, coiling markets. What is shown in the chart are a series of highs and lows. These highs and lows have relative depth which will differentiate one another from being a Euclidean module, a node or a nodule (I won't go into more details here, but know simply that they are real geometric phenomenons that will impart a particular supportive or resistive effect upon price, or even be forecasting of price action, depending on the geometry in consideration).
What is most important here is to realize that each of the geometries in which an impulse is poised into a simple zig-zag or more complex geometry will define a high and low whose core (50% center, or here, let's call it its 50-Fib level), has relevance in both present, past and future price action.
The present relevance is by its own existence. As it completes, a 50% level is defined, and that level will project horizontally in both directions: Past and future.
If the geometry is large enough, then that 50% core is likely to resonate with prior R/S levels. This is important for the present development of the geometry, as it can often be relied upon that the 50% core that is still under development might in fact remain true to its geometry and to its past (i.e.: a current high and low will not be surpassed, and the geometry willl remain as is until price moves out of its weaving action which defines the underlying geometry).
In the future, this is where it is worth projecting lines forward. These lines are neither entries, stops or trading-related cues, unless they are used at 4 times the lesser timeframe (i.e.: in a 4-hour chart, a trade in the H1 should consider these lines, as much as a M15 should relative to H1 chart.
EUCLIDEAN MATHEMATICS & FINANCIAL MARKETS:
It has been my observation, and this as a result of simply watching the markets since 1997, that all moves have for common a divisor, or denominator, that can take all shapes, ranges, length and volumes, and reduce it to one simple geomtric value. I believe that this value is Fibonacci derived, and that it can be no other than Psi, its golden mean - but this is no revelation to the technician.
What is more to my observation is that, all things being equal, and by this I would imply that the Euclidean geometries that affect the financial markets, price can be reduced to its smallest momental unit, which is what I often use in my price projections, although this is merely an adjunct to the Predictive & Forecasting Model, which has added far more precision to this occult geometric based approach.
Nonetheless, it should be known to the pattern trader that the pattern is as much a cloak over a skeleton frame as the robe is to the monk, and that it will NOT forward any information as to the precise turn-around point of, say Point-D of a Bat. This is not to discredit pattern trading, since it has a place in both pacing the general moves of the markets, as much as it has to play as a carrot to the junior Pavlovian traders.
For this and other reason, I recommend the trader to use price as a backdrop in trading activities, and instead to filter markets through all available means, be it indicators, geometries, and the more occult means.
Before a presentation to a large group of international traders, I had projected XAU to fall. That projection came in when it was carving higher highs, and a decline in the abysmal levels this geometry-based projection had offered became less and less of a derisory concept, as price fell hit target deadon and reversed to higher highs. Besides the self-inflating nature of this anecdote (because I was quite proud that it did hit right in the week of my presentation), it also serves to make a point that the field of technical analysis is both a beaten path for those who are making a few steps onto it, but it can also become a real adventure, full of esoteric ideas, psychedelic nights of insane thoughts. But it all starts by looking beyond price. As some know my saying: "Price is the carrot that dangles at the end of a stick, held by institutional hands". So, take the time to learn, unlearn and make your own fray in the brittle vegetations of the technical fields. Step wherever you can, so long as it does not have a footprint before you.
Hi David! One H&S pattern fits perfect to your reversal expectation.
4xForecaster
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Hello @nikokoev - Watch out for the probable bounce to the level of the right shoulder, and potentially to the 1.99750 level, although less probable. On the downside scenario, a fall to 1.93025 looks otherwise possible, corresponding to a prior R/S level in the daily chart. Very nice.
David
nikokoev
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Thank you David! I'm short already at 1.9875 and will not hurry to replace my stop at lower level.
From Twitter/LinkedIn:
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GBPAUD steps across 1.95683 structure once again; Floor may cede to TG-1:
@TradingView GBP AUD #BOE #RBA #forex
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David Alcindor