This is a brief memo about advanced patterns which must be the most popular technical trading method advertised on TradingView.
As an advanced pattern skeptic and Elliott Wave fan, I sometimes see some merit in using them only because they align with Elliott Wave Theory.
In this particular example, Elliott Wave Theory suggests that a bearish motive wave on AUDJPY has been initiated. This count remains valid as long as the price stays below the 87.55 high, which would represent an approximate stop loss level for a short position.
We could even be a little more aggressive by placing the stop loss at the top of the represented ABC structure which stands around 87.1. Breaking this top would trigger a recount of the correction wave but would not invalidate the higher degree count.
But where would be a theoretical sell level? Well, a bearish Gartley pattern is forming with a completion price of 87.7. Based on standard advance pattern strategies, the stop loss should be placed a little higher than the high of the overall pattern. So in other words, it would be the same stop than in the previous Elliott Wave count suggested.
In my opinion, these are the only instances where advanced patterns make sense from a price structure perspective. Trading advanced patterns without any other price structure consideration appear very random to me.
Moreover, knowing the ABCD pattern as represented is enough to define a trade entry, while Elliott Wave Theory would define a stop. In other words, we don't even need to know what Gartley patterns are to initiate a trade with a very similar Risk Reward ratio...
In any case, thanks for your attention and all the best
As an advanced pattern skeptic and Elliott Wave fan, I sometimes see some merit in using them only because they align with Elliott Wave Theory.
In this particular example, Elliott Wave Theory suggests that a bearish motive wave on AUDJPY has been initiated. This count remains valid as long as the price stays below the 87.55 high, which would represent an approximate stop loss level for a short position.
We could even be a little more aggressive by placing the stop loss at the top of the represented ABC structure which stands around 87.1. Breaking this top would trigger a recount of the correction wave but would not invalidate the higher degree count.
But where would be a theoretical sell level? Well, a bearish Gartley pattern is forming with a completion price of 87.7. Based on standard advance pattern strategies, the stop loss should be placed a little higher than the high of the overall pattern. So in other words, it would be the same stop than in the previous Elliott Wave count suggested.
In my opinion, these are the only instances where advanced patterns make sense from a price structure perspective. Trading advanced patterns without any other price structure consideration appear very random to me.
Moreover, knowing the ABCD pattern as represented is enough to define a trade entry, while Elliott Wave Theory would define a stop. In other words, we don't even need to know what Gartley patterns are to initiate a trade with a very similar Risk Reward ratio...
In any case, thanks for your attention and all the best
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.