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Practical Pattern Recognition for Trends and Corrections

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FIGURE 3.5 Overlapping Sections Are Typical of a Correction

a sharp decline, which would have made many traders bearish, just at a time when the market may be ready to take off to the upside following a corrective low. Figure 3.7 adds more data to the previous chart and shows how the decline was a correction as anticipated by the overlap and the market did eventually make a new high, also as anticipated. Wouldn’t it be helpful to your trading to recognize, a few bars after the section C low, that the YM in the previous two charts was probably making a correction which would be followed by a new high without taking out the low shown on the chart? Let me answer that for you just in case you’re not paying attention. Very helpful. You would then use the momentum, price, and time tools taught in this book to determine if the market was in a position to complete a correction for a long trade setup well before it continued to advance and take out a swing high. Pattern position signals can be a key component of any practical, real-world trading plan. The simple guidelines like the overlap guideline can give an early warning of the probable outcome of the current market position. Have you ever read a book or taken a trading course where every example showed how every market responded to whatever signal was being taught? A better question may

Profile for ERIC  Hunt

(wiley trading) robert c miner high probability trading strategies entry to exit tactics for the for  

(wiley trading) robert c miner high probability trading strategies entry to exit tactics for the for  

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