Are Price Patterns Repeatable?

Are price patterns repeatable over time?  Of course, that is what technical analysis is all about.

Are Price Patterns Repeatable?

In the chart below, emini Nasdaq 180-minute, there are markers from A to G.  Beginning with Point A, price is making lower highs and so is the stochastics.  This is typical trend behavior indicating a new low will most likely form.  However, at Point B, the stochastics forms an equal low and price forms a higher low.  This indicates that a lower high will need to from to fuel the market for a new low.  At Point C, the market forms the lower high with a lower high in the stochastics, as well.  This will likely provide the fuel needed for a new low.

Are price patterns repeatable

At Point D, a new low in both price and the stochastics forms, plus the stochastics is indicating the market is oversold.  What happens when a market is over-extended?  A retracement is likely.  Price retraces back to the ATR (Point E).  This point is significant because hidden divergence forms (lower highs in price with a higher high in the stochastics).  Again, price moves down but fails to produce a new low?  Why?  because it needs more fuel.  At Point F, price forms a slightly higher high but the stochastics forms a lower high (trend divergence).  This should be the fueled needed for price to push lower.  However, at Point G, instead of forming a new lower low, price forms a higher low but the stochastics forms a lower low (hidden divergence).  Again, are price patterns repeatable?  Yes.

The hidden divergence at Point G is not your typical hidden divergence because we typically see hidden divergence on the retracements.  This hidden divergence is occurring on the lows.  The hidden divergence on the lows in this example identifies that price may break through the ATR (buyers are fueling a move to the upside not the downside).  If sellers do not take control back, the emini Nasdaq will likely end on a high this week.

Are Price Patterns Repeatable?

More importantly, the chart shows that price patterns are repeatable.  However, it does take time for traders to learn to mark their charts and read the clues.  These techniques are taught in the online video content that is included in both the Silver and Diamond Trading Packages.  Plus, for those that need additional training, the Diamond Trading Package also includes 10 hours of personal mentoring with Gail.

 

About Gail Mercer

Gail Mercer, Founder of TradersHelpDesk, is a highly respected trader, trainer, author, and speaker residing in North Carolina. She has over 15 years of experience in trading and in the development of custom indicators.

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