| Posted in THE GATEWAY TO SHORT-TERM TRADING | Posted on
The vast majority of destabilizing and supportive market energies remain hidden from individual
traders. Insiders quietly manipulate news to protect options positions. Analysts push stocks so their
trading departments can unload inventory. Operating failures pass through accounting magic and
disappear. As a result, market knowledge has limited value unless it meets one important test: it
must stand alone as a complete fractal image of all hidden and known information about that
market.
Traders and investors study markets through price charts. These powerful visual tools offer a
common language for all equities, derivatives, and indices. The simplest chart just draws a timeprice
axis and adds each day’s closing price as a single point or vertical bar. The connected data
points then plot a series of oscillating highs and lows that participants study to predict whether price
will move up or down over time.
Pattern analysis begins with the simple observation that all market activity reflects itself in the
fractal properties of price and volume. These small bits of information create a profound visual
representation when tied together into a continuous time series: a display of both current and past
outcomes for all interactions of infinite market forces as seen through the eyes of all participants.
In contrast to the cold discipline of fundamental analysis, the pattern analyst’s world reeks with lust
and intrigue. The markets are about money. No other controlled substance brings out the best and
worst of humanity with quite so much intensity. The markets become our lovers, our bosses, and the
bullies who beat us up when we were young. As assets shrink or swell, emotions flood in and cloud
reason, planning, and self-discipline. Chronic fight-flight impulses emerge to trigger unconscious
(and often inappropriate) buying and selling behavior.
Actions initiated through emotional impulse generate oscillations in both price and time that print
clearly on charts. The skilled pattern reader observes this unstable behavior and visualizes
impending price movement. But successful trade execution requires both accurate prediction and
excellent timing. Fortunately, chart patterns work without crystal balls or divine intervention. As a
detailed map of all market forces, patterns identify exact trigger points where the swing trader can
exploit the emotional crowd.
Patterns simplify and condense a vast universe of market interplay into easily recognizable setups.
The subsequent analysis actually evokes the subjective right brain processes rather than the cold
analytics of the orb’s left side. Correct interpretation requires that the swing trader focus intuition
on crowd impulses evident within each price chart. Those who divine correctly and apply that
knowledge to obtaining profits are truly artists at their core, not masters of science.
Edwards and Magee did not invent patterns for their 1948 classic Technical Analysis of Stock
Trends. They observed an order within price movement as ancient as the auction place. They also
recognized the existence of cyclical crowd behavior throughout all time frames and all markets.
Although the individual components are simple and easy to understand, these repeating formations
offer the most intriguing predictive methods in the entire financial world.
traders. Insiders quietly manipulate news to protect options positions. Analysts push stocks so their
trading departments can unload inventory. Operating failures pass through accounting magic and
disappear. As a result, market knowledge has limited value unless it meets one important test: it
must stand alone as a complete fractal image of all hidden and known information about that
market.
Traders and investors study markets through price charts. These powerful visual tools offer a
common language for all equities, derivatives, and indices. The simplest chart just draws a timeprice
axis and adds each day’s closing price as a single point or vertical bar. The connected data
points then plot a series of oscillating highs and lows that participants study to predict whether price
will move up or down over time.
Pattern analysis begins with the simple observation that all market activity reflects itself in the
fractal properties of price and volume. These small bits of information create a profound visual
representation when tied together into a continuous time series: a display of both current and past
outcomes for all interactions of infinite market forces as seen through the eyes of all participants.
In contrast to the cold discipline of fundamental analysis, the pattern analyst’s world reeks with lust
and intrigue. The markets are about money. No other controlled substance brings out the best and
worst of humanity with quite so much intensity. The markets become our lovers, our bosses, and the
bullies who beat us up when we were young. As assets shrink or swell, emotions flood in and cloud
reason, planning, and self-discipline. Chronic fight-flight impulses emerge to trigger unconscious
(and often inappropriate) buying and selling behavior.
Actions initiated through emotional impulse generate oscillations in both price and time that print
clearly on charts. The skilled pattern reader observes this unstable behavior and visualizes
impending price movement. But successful trade execution requires both accurate prediction and
excellent timing. Fortunately, chart patterns work without crystal balls or divine intervention. As a
detailed map of all market forces, patterns identify exact trigger points where the swing trader can
exploit the emotional crowd.
Patterns simplify and condense a vast universe of market interplay into easily recognizable setups.
The subsequent analysis actually evokes the subjective right brain processes rather than the cold
analytics of the orb’s left side. Correct interpretation requires that the swing trader focus intuition
on crowd impulses evident within each price chart. Those who divine correctly and apply that
knowledge to obtaining profits are truly artists at their core, not masters of science.
Edwards and Magee did not invent patterns for their 1948 classic Technical Analysis of Stock
Trends. They observed an order within price movement as ancient as the auction place. They also
recognized the existence of cyclical crowd behavior throughout all time frames and all markets.
Although the individual components are simple and easy to understand, these repeating formations
offer the most intriguing predictive methods in the entire financial world.
