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I glanced at his sequential briefly on his web site and it "looks" a lot
like the 3pb (3-point-break) method that you can plot in RavenQuote as a
plug-in module (see attached gif). 3pb is a variation of Point & Figure
charting.
If it's based on a standard 3pb method, the "strict" interpretation is that
each "count" cannot occur unless the close of a bar is a new high/low (one
option is to use the high/low of each bar to compare, but I prefer the
strict method). So you may end up "counting" new highs at every bar, or a
new "count" may not occur for many bars. Time is taken out of the equation
for the most part. So is range or price targets (Fib or otherwise), although
you could add that. All that matters is the count.
You then accumulate these new highs/lows, until you hit key Fib numbers like
3,5,8, and 13 new highs/lows (Raven sends automatic alerts at whatever
counts you want). Depending on the interval (3 minute can work well for day
trading), you pare your trade on these major counts, with 3 and 5 being the
extent of a middle trend, and 8 and 13 being usually a day long trend. You
can also pyramid up if bar 4 and 6 are higher, then pyramid down at 8 and
13, for instance.
The "break" in 3pb is that the reversal break price is the third low back
including the low of the current bar.
On the attached chart of JNPR, you can see the reversal point is marked 47.
You can also note that finishing the 5 count down before the green 9 count
up occured between yesterday and today (dark bars are before today's). By
the method, you would have pared on the 5 count up, and pared some more on
the 8 count up. Notice there is no time scale. Only price and range. The
current value in black of 46 9/16 (don't ask) must break the low of 45 1/2
to make a new low bar, or break the high of 47 to reverse the trend, and
begin counting all over, so you can immediately assess your range and
risk/reward ratio.
It can be quite facinating to see pullback after pullback on New High 12,
sure that there is no way that 13 is going to get hit, them bingo, there it
is, and there's your reversal.
I didn't get too deep into the DeMark site to try to figure out why his
major numbers appear to be 1 less than a Fib, but hey.. to each his own...
Just my idle thoughts on Thursday nite during rerun season... ;-).
Best regards,
Gene
Attachment:
Description: "3pb chart JNPR.gif"
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