IMPORTANCE OF THE NUMBER THREE

Uncle

Established member
671 2
#1
It is interesting to note how often the number three shows up in the study of technical analysis and the important role it plays in so many technical approaches. For example, the fan principle uses three lines; major bull and bear markets have three phases (Dow theory and Elliott Wave theory); there are three kinds of gaps some of the more commonly known reversal patterns, such as the triple top and the head and shoulders, have three prominent peaks; there are three differnt classification of the trend (major, secondary and minor) and three trend directions (up, down and sideways); among the generally accepted continuation patterns there three types of triangles - the symmetrical, ascending, and descending; there are three principle sources of information - price, volume and open interest. For whatever the reason, the number three plays a very prominent role throughtout the entire field of technical analysis.

Source: John Murphy's "Technical Analysis of the Futures Markets"

Especially watch for triple bottoms and triple tops for opportunities

John