Does the pattern recognition work?
This is really tough question. The technical analysis rely heavily on pattern recognition. Here I will share my opinion without covering all the issue.
I prefer to rely on more marginal patterns that the most used. I mean that when we have a formed typical pattern, everybody sees it. And when that happens a very complex relationship develops between the market participants. In the litterature it is referred as the insider's game.
Is it the true or just a plausible explanation I do not know.
Anyway I prefer to use more marginal patterns for that reason.
The Law of the charts of Joe Ross is a very good choice.
The Wolfe waves is another good choice.
You can refer to the excellent book Trade Chart Patterns Like The Pros
by Suri Duddella. As he says you need only one pattern to be successful. In this book you can find reference for many patterns in a consistent way.
What happens in the market?
My theory is that in the Forex markets we have long term memory chaotic processes. And then it is possible to accept that what happens now determine the future.
So basically the price movement can be persistent (fractal dimension less than 1.5) or anti-persistent (fractal dimension bigger than 1,5) according to its fractal dimension.
On the market those phases can be seen easily.
-So when a fractal break - out starts we have a transition and during this transition patterns are formed that will indicate how far this break - out is going to go. I mean the Fibonacci relationships.
-When we are into a range-bound and anti-persistent movement often the Wolfe waves give us a clue where the price may go when it goes out of balance.
-Often after the fractal break out the movement starts to consolidate there often we see harmonic patterns to develop.
Forgive me folks I do not have pictures and shots for today. This is only abstract and theoretic stuff.
This is really tough question. The technical analysis rely heavily on pattern recognition. Here I will share my opinion without covering all the issue.
I prefer to rely on more marginal patterns that the most used. I mean that when we have a formed typical pattern, everybody sees it. And when that happens a very complex relationship develops between the market participants. In the litterature it is referred as the insider's game.
Is it the true or just a plausible explanation I do not know.
Anyway I prefer to use more marginal patterns for that reason.
The Law of the charts of Joe Ross is a very good choice.
The Wolfe waves is another good choice.
You can refer to the excellent book Trade Chart Patterns Like The Pros
by Suri Duddella. As he says you need only one pattern to be successful. In this book you can find reference for many patterns in a consistent way.
What happens in the market?
My theory is that in the Forex markets we have long term memory chaotic processes. And then it is possible to accept that what happens now determine the future.
So basically the price movement can be persistent (fractal dimension less than 1.5) or anti-persistent (fractal dimension bigger than 1,5) according to its fractal dimension.
On the market those phases can be seen easily.
-So when a fractal break - out starts we have a transition and during this transition patterns are formed that will indicate how far this break - out is going to go. I mean the Fibonacci relationships.
-When we are into a range-bound and anti-persistent movement often the Wolfe waves give us a clue where the price may go when it goes out of balance.
-Often after the fractal break out the movement starts to consolidate there often we see harmonic patterns to develop.
Forgive me folks I do not have pictures and shots for today. This is only abstract and theoretic stuff.
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