The Only Price Pattern That Really Counts

Price pattern analysis is always interesting, sometimes informative and occasionally useful depending on how widely known it is. 

For example, several months ago, there was a widely advertised head and shoulders pattern in the gold market which was far from complete. No luck there.

This eventually was touted as a cup and handle, also a failure.

OMG! Now we have the double top featured in Gold with all the attendant doomsday scenarios.

A crash pattern was recently identified for the S&P500 any day now since we are in the "crash season". Excuse me, has it not already lost nearly 25%? A bit late to the party, don't you think?

Where does it all end?  

Price Patterns of Progress (or Problems) 

The danger in these and other patterns is they may morph into other patterns or simply fail no matter their advertised accuracy rate.

In addition, when everybody knows of an important developing pattern, support zone or forecast, they have already taken action on it. Who is left to buy?

Confirmation action out of that "pattern" is first required to establish any pattern's validity.

The Only Price Pattern That Counts

The only price pattern that really counts is not a pattern at all but the collection of primary trend forces in the daily, weekly and monthly time frames and their interaction. These may also fail but they do so in a logical time frame sequence. This has the advantage of precisely knowing where you are in time.

For example, new trends (positive or negative) always start in the daily trend and may then migrate into higher time frame trends. 

This eliminates confusion, provides confirmation and offers clarity on where you are on a time frame basis.

In Summary

Avoid pattern analysis unless its supported by primary time frame trends and confirmed by a conclusive breakout/breakdown resolution.

The concept of time trend forces is clearly outlined in Simple Trading Logic.

9/27/22

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Caveat

While past performance and probabilities are favorable, results are not guaranteed. Use these trade plans, stocks or comments at your own risk. All analytical content and commentary provided within or from this site is aimed purely to educate or inform readers on the potential technical and fundamental aspects and possible value of intelligent, mathematically based research tools and charts for due diligence purposes.