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Hello All:
I'm working on a program which utilizes chart patterns to build an index
which will be one tool I use in taking trades. Because of the dynamic
nature of patterns, rather then have the program search for the patterns,
the program accepts input from a user. Therefore, the program's primary
function is to quantify the probability of a given direction. I have found
the following patterns useful as indications of a probable price move.
However all patterns are NOT created equal. Sometimes a price moves quick
and surely in the projected direction (eg. New Low) after a particular
pattern is elected, some patterns remain valid for quite awhile before the
price moves (eg. divergence between MACD or RSI and price).
Using my experience and "Schwager on Futures" I have chosen several patterns
which have been useful. My question to all of you is:
How would you rate the following in relation to each other?
Are there some that stand out for you as superlative?
Could you assign a number (10 being VERY reliable ... 1 VERY Unreliable)
to the folowing:
-Bearish Pattern Indicators
New Low
Downward Gap
Correction of Upward Move falls below assumed Support
2nd retracement of Downward move holding below .618 Resistance
Bearish Reversal
Downward Penetration of previous Trading Range Support
Neckline of H & S Top pierced
Downside breakout of rising wedge
Downside breakout of pennant (in a beartrend)
Spike High
Bearish Divergence with MACD
Bearish Divergence with RSI
C & H failing to penetrate resistance
Counter-Anticipated Breakout of Flag or Pennant downwards
Upside Three Tries Burst (Linda Rashcke calls this 3 little indians)
Bull Trap (return to mid-trend as confirmation)
Failed H & S Bottom (re-pierces neckline)
Upside Gap filled on the downside
-Bullish Pattern Indicators
New High
Upward Gap
2nd retracement of Upward move holding above .618 Support
Correction of Downward Move rises above assumed Resistance
Bullish Reversal
Upward penetration of previous Trading Range Support
Neckline of H & S Bottom pierced
Upside breakout of falling wedge
Upside breakout of pennant (in a bulltrend)
Spike Low
Bullish Divergence with MACD
Bullish Divergence with RSI
C & H Handle holding at Support
Counter-Anticipated Breakout of Flag or Pennant upwards
Bear Trap occurance (return to mid-trend as confirmation)
Failed H & S Top (re-pierces neckline)
Double Top pierced
Downside Gap filled on upside
And of course if there are some patterns that you have found significant
that I haven't mentioned and want to share them, great.
Thanks and Have a good weekend,
Joe
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