So you know about trading all different types of shapes right?
Head and shoulders? Wedges? Triangles?
So when I first learned these patterns I was told that I needed to wait for a breakout. Then I would enter on a break-out, with a stop loss behind the breakout bar. This always upset me.Why do I have to be so late to the party?
So that is when I came out across partial declines/advances. I first saw this in Thomas Bulkowski's wonderful book/site, Chart Patterns.
Basically, the idea is you can start determining where the structures is breaking down early, and can anticipate a break, way before it comes. Let me give you an example with a recent USD/JPY, 4 hour chart from a couple of weeks ago:
So connect two highs. You connect two lows. And you end up with a broadening structure.
So we have a broadening structure here, with highs staying the same, and lows getting lower.
Basically, at this point, if bulls or bears cannot reach the boundaries, that means there is weakness.
I marked with a bell where bulls couldn't reach highs. That is called a partial advance, price isn't getting where it should be. And you see how the bears took over from there.
The same idea with partial declines, basically whenever price doesn't get to where it should be going, there is a disruption. Another example from AUD.USD. We have two lows, two highs, that show us a rectangle. And then the third low, the bell, doesn't get anywhere near the rectangle bottom. Problems for the bears!
When I get some more time I want to describe entry/exits, and also how to anticipate the partial decline/advance before it happens.
Head and shoulders? Wedges? Triangles?
So when I first learned these patterns I was told that I needed to wait for a breakout. Then I would enter on a break-out, with a stop loss behind the breakout bar. This always upset me.Why do I have to be so late to the party?
So that is when I came out across partial declines/advances. I first saw this in Thomas Bulkowski's wonderful book/site, Chart Patterns.
Basically, the idea is you can start determining where the structures is breaking down early, and can anticipate a break, way before it comes. Let me give you an example with a recent USD/JPY, 4 hour chart from a couple of weeks ago:
So connect two highs. You connect two lows. And you end up with a broadening structure.
So we have a broadening structure here, with highs staying the same, and lows getting lower.
Basically, at this point, if bulls or bears cannot reach the boundaries, that means there is weakness.
I marked with a bell where bulls couldn't reach highs. That is called a partial advance, price isn't getting where it should be. And you see how the bears took over from there.
The same idea with partial declines, basically whenever price doesn't get to where it should be going, there is a disruption. Another example from AUD.USD. We have two lows, two highs, that show us a rectangle. And then the third low, the bell, doesn't get anywhere near the rectangle bottom. Problems for the bears!
When I get some more time I want to describe entry/exits, and also how to anticipate the partial decline/advance before it happens.
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