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Not sure, but you may be looking for something more complex than it is. In
any event, it may have been a couple of weeks since I posted an explanation,
so here goes. The price ranges you cite were marked off in my post
"Symmetry - S&P 30 min" and follow-up "Symmetry - S&P 30 min (bingo!)" both
posted on the 29th. Yes, the setup does have the general appearance of a
head and shoulders in all time frames I have posted from 2min through daily,
but this has nothing to do with the H&S pattern. Actually, my identification
and application are much more akin to William O'Niel's cup and handle which
I have used in trading for many years.
The application is quite simple, for example in the downtrend:
1) every time a new low is made (e.g. 128350 on 24May) look to the left of
the extreme high (131925 on 22May) for a pivot low which has been touched or
exceeded (e.g. 128350 on 18May. Draw a support line from that left pivot low
to the right (well into the future) - I often refer to this line as the rim
as in a cup. Draw a resistance line from the major pivot high to the
immediate left of the pivot low (e.g. 129950 on 17May) to the right also
well into the future.
2) wait for a significant retracement back above the support line toward the
resistance line (roughly halfway or more). If the resistance line is
exceeded by more than a couple of ticks, expect the reversal to hold and
price to continue to rally back toward the extreme high i.e. the decline is
likely to fail. If the resistance line holds and price returns to the
support line aka rim, expect the decline to continue and reach targets below
the rim which are equal to 62% and/or 100% of the distance between the
extreme high and the rim. Sometimes I enter on the retracement and sometimes
on the return to the rim - just depends on how I feel about the setup. If it
helps, think of this retracement and return as a handle on the cup - what I
have added to O'Niel's work is relating the pivots on the right side of the
cup to the pivots on the left.
3) there is a variation of 2) where price declines right through the rim for
a bit, retraces to the rim, then continues south. I enter these using a
limit order placed a few ticks below the rim.
It's that simple, however not infallible. The nice ones are progressive from
a top or bottom as in the 2 minute chart I posted "Symmetry on 2 min
spoo.gif" which I trade off an afternoon low on the 30th. I generally prefer
price patterns to indicators because the information conveyed is immediate
rather than filtered and symmetry is one I use quite a bit, but not
exclusively. I do find that when price is symmetrical it is easy to trade
and when there is little or no symmetry I had best stand aside.
Earl
----- Original Message -----
From: "Bill Daniel" <bogeybunky@xxxxxxxxxxxxxx>
To: "REALTRADERS" <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, June 01, 2001 11:07 AM
Subject: [RT] SYMMETRY
> I have studied Earl's charts on symmetry and quite frankly often have
> trouble distinguishing the symmetry. I have the highest respect Earl's
> commentary and analysis as he is always thorough and thought provoking. I
> know that my problem is my own inexperience. However, the light bulb
seems
> to have come finally come on for me with regard to symmetry. I had a 20
> minute E-Mini S&P chart on the screen with 25 days of data. I compressed
it
> down into the tightest format and it gave what appears to me as a perfect
> example of symmetry.
>
> Around May 22 there is a nice double peak at about 1320. About 4-5 days
on
> either side there are corrections that peak around 1300. Then about 4-5
> days on either side of that the market level is down around 1250. Then
> looking to the left for about 15 days the market moved between a range
from
> about 1240 to 1280.
>
> Does this left range look like the left side of a Head and Shoulders
pattern
> with the right side just beginning to form?
>
> Would appreciate any realtrader comments on my observations.
>
> Thanks
>
> Bill
>
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