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Commodity
Chart Top and Bottom Formations
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1-2-3
(A-B-C) Top
Anticipates a change in trend from up to down on a break
below the number 2 point. To trade this formation, place
your order to fill on the break down past the number
two point, and place your stop loss order behind the
number 1 point. |
1-2-3
(A-B-C) Bottom
Anticipates a change in trend from down to up on a break
above the number 2 point. To trade this formation, place
your order to fill on the break up past the number two
point, and place your stop loss order behind the number
1 point. |
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Head
and Shoulders Top
Anticipates a decline on a break below the Neckline.
To trade this formation, place your order to fill on
a break down below the neckline, place your stop loss
order behind the head. |
Head
and Shoulders Bottom
Anticipates a rise in prices on a break above the Neckline.
To trade this formation, place your order to fill on
a break up above the neckline, place your stop loss
order behind the head. |
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Double
Top
Anticipates a change in trend from up to down. |
Double
Bottom
Anticipates a change in trend for down to up. |
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Triple
Top
Anticipates a change in trend from up to down. |
Triple
Bottom
Anticipates a change in trend from down to up. |
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Rounded
Top
Anticipates a change in trend from up to down. |
Rounded
Bottom
Anticipates a change in trend from down to up. |
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Congestions
Generally refers to any type of chart pattern in which
prices are temporarily trapped in a trading range. The
range can be converging, expanding or defined by parallel
lines on the horizontal. Congestions of shorter duration
are usually found to be a variation of a Flag, or some
variation of a converging or expanding triangle. Periods
of longer congestion are usually defined by a variation
of a converging or expanding triangle, or may be an
elongated parallel channel on the horizontal. Such patterns
are frequently referred to being Continuation patterns
if price break out in the direction of the trend leading
to the formation of the congestion pattern. |
Continuation
Patterns
Periods of longer congestion are usually defined by
a variation of a converging or expanding triangle, or
may be an elongated parallel channel on the horizontal.
Such patterns are frequently referred to being continuation
patterns if price break out in the direction of the
trend leading to the formation of the congestion pattern. |
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Gaps
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Breakaway
Gaps
Occur when prices gap higher or lower out of a congestion
pattern in the direction of the prevailing trend. Rule
of thumb, gaps were meant to be filled, expect a reversal
in trend back to fill the gap. |
Measuring
or Running Gaps
Difficult to identify, but usually occur at the midpoint
in a price rally or decline. Rule of thumb, gaps were
meant to be filled, expect a reversal in trend back
to fill the gap. |
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Exhaustion
Gaps
Occur at the end of a market trend, usually after steep
accelerated uptrend or downtrend. The gap can leave
one price bar or a small number of congestive price
bars behind. |
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Commodity
Charts Retracements
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Fibonacci
Retracements
Fibonacci Retracement levels correspond percentage retracements
that occur in the ebb and flow of a market trend. According
to the Elliot Wave Theory, market trends tend to occur
in five distinct waves: three waves that move in the
direction of the trend with the middle or third wave
being the strongest usually, alternating against two
counter-trend waves. Elliot asserted that these counter-trend
waves will usually retrace against the trending waves
by 38.2, 50 and 61.8 percent (also, less frequently
by 24 and 76 percent). These Retracement Percentages
correspond to natural ratios discovered by the Greeks
called the Golden Ratio and rediscovered by Fibonacci,
a medieval, Italian Mathematician. |
Fibonacci
Numbers
Leonardo Fibonacci was a mathematician who was born
in Italy around the year 1170. It is believed that Mr.
Fibonacci discovered the relationship of what are now
referred to as Fibonacci numbers while studying the
Great Pyramid of Gizeh in Egypt. Fibonacci numbers are
a sequence of numbers in which each successive number
is the sum of the two previous numbers: 1, 1, 2, 3,
5, 8, 13, 21, 34, 55, 89, 144, 610, etc. These numbers
possess an intriguing number of interrelationships,
such as the fact that any given number is approximately
1.618 times the preceding number and any given number
is approximately 0.618 times the following number. |
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