KnovaWave Pattern Recognition Methodology
Read the crowd.
Andrews/Babson Lines are a cornerstone of our method
Two of the prime components of a successful trading strategy are the trader?s psychology & the market?s psychology.
OK, let us deal with Market Psychology here. Charts are excellent at telling us about the collective psychology of the
investment & trading community and the resultant shifting of power between the forces of supply and demand. It is
essential to be able to determine exactly when the balance of power shifts between the forces of supply and demand ?
that is what trading as opposed to investing is all about!
There are hundreds of thousands of market participants buying and selling securities for a wide variety of reasons: hope
of gain, fear of loss, tax consequences, short-covering, hedging, stop-loss triggers, price target triggers, fundamental
analysis, technical analysis, broker recommendations and many more. It can be a futile process to figure out why participants
are buying and selling. Chart patterns put all buying and selling into perspective by consolidating the forces of supply and
demand into a concise picture. As a complete pictorial record of all trading, chart patterns provide a framework to analyze
what is actually going on objectively in the marketplace. A trend is merely an indicator of an imbalance in the supply and
demand of a particular issue or commodity.
These changes can usually be seen by market action through changes in price. These price changes often form meaningful
chart patterns that can act as signals in trying to determine possible future trend developments. Research has proven that some
patterns have high forecasting probabilities.
These patterns include: The Cup & Handle, Flat Base, Ascending and Descending Triangles, Parabolic Curves, Symmetrical Triangles, Wedges, Flags and Pennants, Channels and the Head and Shoulders Patterns.
Chart pattern analysis can be used to make short-term or long-term forecasts. The data can be intraday, daily, weekly or monthly and the patterns can be as short as one day or as long as many years. Gaps and outside reversals may form in one trading session, while broadening tops and dormant bottoms may require many months to form if not years. We divide chart patterns between continuation and reversal patterns ? as that is what the market does ? it continues or reverses.
KnovaWave Methodology - Plan Components
To learn more about the other components of KnovaWave Methodology just click on the link below.
- Pivot analysis and market psychology around inflexion points.
- Pattern recognition reading the probability of future price action.
- KnovaWave Gann method in evaluating time and price and market cycles.
- Median lines using Andrews/Babson techniques and KnovaWave Medians.
- Fibonacci Techniques using mathematical repetition and prediction.
- Elliott Wave Analysis in determining our medium term view and for intraday analysis of inflexion waves.
- Murrey Math or Trading Range retracement and for evaluating turning points or reversal days.
- Bifurcation to recognize the market possibilities and opportunities.
- KnovaWave Reversal Methodology to recognize and profit from change.
- 80/20 Putting it together - having a truly profitable and disciplined trading plan.
KnovaWave - LEARN, PROFIT & ENJOY!
