P1: PIC/PIC c03
August 18, 2008
Printer: Yet to come
Practical Pattern Recognition for Trends and Corrections
FIGURE 3.27 GBP/USD Pattern Position
Before we go on to the next chapter and learn how to make high probability price targets in advance for support, resistance, and trend reversal, letâ€™s take a quick look at how we will use what we have learned so far about momentum and pattern position to help make trade decisions.
MOMENTUM AND PATTERN POSITION In Chapter 2, you learned how to use dual time frame momentum position as the filter to identify probable trade setups. How do we use what we have learned so far about momentum and pattern together to up the odds for a successful trade and lower the initial capital exposure? Letâ€™s revisit the QQQQ daily chart with Figure 3.29, and include a momentum indicator. The pattern signal that a five-wave trend is complete occurs if the market takes out the Wave-4 extreme, in this case a low. The Wave-4 extreme may be far from what