Hi Tim,
Famous graphic models and patterns
In terms of appearance, ST patterns may resemble classic models of continuation and fracture trends, or the Harmonic patterns of Gartley and Pesavento, and perhaps even Elliott waves.
The main factor for the formation of classic graphic models is the presence of a trend, which is reflected in the name of the model. To complete these models, you need to break through the price of the trend line, drawn by the peaks and slumps of the model itself. As John Murphy writes, "the interpretation of graphic models is subordinated, rather, to general patterns than to rigid rules.... Even an elementary classification of price models is sometimes difficult. Typically, triangles are models of continuation of the trend, but sometimes they show a break in the trend." Thus, classical models of technical analysis, performing a predictive function, require the trader to correctly determine their location in the market structure. The meaning of their application is to determine the direction of movement preceding the appearance of the trend. The volume of trades plays an important role in interpreting models of continuation and fracture.
The Elliot wave theory, like the previous technique, often requires the trader's predictive abilities. Waves at any stage of their development are able to move from a growing structure to a correctional model and vice versa. Often, it is only possible to correctly mark out the necessary formations on the graph of history.
The Harmonic patterns of Gartli and Pesavento, which include more than 20 different combinations, mainly determine the place of the trend reversal. They are based on the ratio of the segments of the sides to the Fibonacci coefficients and even to the square root of the Fibonacci numbers. The more ideal the model, the more reliable its implementation. The idealization of the nature of movements on the exchange excludes the possibility of accidental opening and closing positions by players. Perhaps, therefore, Harmonic patterns that correspond to all parameters do not appear on the charts often.
Well-known graphic models and patterns, by their nature, resemble ghosts: they sometimes appear, and not everyone can recognize them. In the search for a universal method for determining exchange movements all possible known natural laws and phenomena have probably been used. People's desire to know the future has produced many technical methods that sometimes work, sometimes don’t, and often require almost extrasensory abilities from the trader.
It is obvious that there are significant differences between the classical graphic models and ST patterns. The Structural Target patterns presented in this book reflect the majority of market movements and give the trader unambiguous signals to action. ST patterns are almost always present in the market and consist of market charts. Following one after another, they create a graphic exchange chart.
In essence, they are the market itself, which is consistently divided into components. For the formation of ST patterns, no trend lines, geometric proportions of the model itself, trading volume, or open market interest are needed. They are easily recognized and built only on the basis of breaking through the fractal levels and the distance to the Target. ST patterns remove from the market the uncertainty inherent in the previously known graphic compositions and simplify the work of the trader.
Vladimir