Lessons 4 & 5 Yes/No Patterns
Posted: Fri Oct 10, 2008 11:21 am
Relative to the discussion of Yes and No patterns in Lessons 4 and 5, there is no place (so far) where these patterns have actually been defined and specifically characterized. Here is my "definition" and list of essential components for a Yes pattern. Would you please review it and let me know either if I'm confused and off-base or if I've left out any essential elements? Is this what a Yes pattern really is/does and are there any other important features of a Yes pattern which I've missed?
A Yes pattern is a pattern of price bars on a LTP chart which confirms the strength of support or resistance previously identified on a HTP chart, thereby indicating that the HTP level will likely hold. Using as an example a trend up to weekly resistance and an anticipated weekly Refresh back down to its PLdot, a Yes pattern on the daily chart will be seen, in roughly this sequence of events, as:
As prices, and the PLdots, continue their trend up and approach the level of weekly resistance, there will be daily Refreshes back down towards the daily PLdots.
The downward push of the daily Refreshes will grow stronger as resistance is approached
The slope of the alignment of the daily PLdots will begin to level off (dots will begin to “swing†down)
Downward daily PLdot Pushes will appear and likewise grow stronger the closer prices get to the monthly resistance level.
Finally, the daily PLdots themselves will begin to roll over and move down.
These price actions on the daily chart are a reflection of their reaction to the termination energy around the weekly resistance level.
Because the daily price bars formed a Yes (as opposed to a NO) pattern, we can infer that the weekly termination energy is sufficiently strong that resistance at that level will likely hold. And, therefore, a short trade from that level would have a high probability of being profitable.
Is all of this correct? Did I leave out anything important? MM
A Yes pattern is a pattern of price bars on a LTP chart which confirms the strength of support or resistance previously identified on a HTP chart, thereby indicating that the HTP level will likely hold. Using as an example a trend up to weekly resistance and an anticipated weekly Refresh back down to its PLdot, a Yes pattern on the daily chart will be seen, in roughly this sequence of events, as:
As prices, and the PLdots, continue their trend up and approach the level of weekly resistance, there will be daily Refreshes back down towards the daily PLdots.
The downward push of the daily Refreshes will grow stronger as resistance is approached
The slope of the alignment of the daily PLdots will begin to level off (dots will begin to “swing†down)
Downward daily PLdot Pushes will appear and likewise grow stronger the closer prices get to the monthly resistance level.
Finally, the daily PLdots themselves will begin to roll over and move down.
These price actions on the daily chart are a reflection of their reaction to the termination energy around the weekly resistance level.
Because the daily price bars formed a Yes (as opposed to a NO) pattern, we can infer that the weekly termination energy is sufficiently strong that resistance at that level will likely hold. And, therefore, a short trade from that level would have a high probability of being profitable.
Is all of this correct? Did I leave out anything important? MM