Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 44

Table 2.1 shows identification guidelines for the chart pattern, and Figure 2.2 shows a typical example. The pattern appears in the figure as ABCD.

Appearance. As I mentioned, the shape of the bearish AB=CD can look weird when point D is far from the ABC turns. The figure is an example of that asymmetry, but not an extreme one. Leg AB is 36 days long, so you might expect (or hope) the CD move to also be that long. It's not. CD is 66 days long or almost twice the AB duration. It'll be rare that leg CD matches the length of AB. Just because CD is almost twice as far away as AB doesn't mean the pattern is invalid. Rather, the turn is determined by the Fibonacci number used to located it.

Table 2.1 Identification Guidelines

Characteristic	Discussion
Appearance	A three‐leg zigzag pattern with two turns located by Fibonacci ratios.
BC/BA retrace	The ratio of BC/BA is one of .382, .5, .618, .707, .786, or .886.
DC/BC extension	The extension of leg DC to BC is one of the Fibonacci numbers: 1.13, 1.27, 1.41, 1.618, 2, 2.24, 2.618, or 3.14.
Hills and valleys	From A to B, there should be no valley lower than A and no peak higher than B. From B to C, there should be peak higher than B and no valley lower than C. From C to D, there should be no valley lower than C and no peak higher than D.
Volume	Trends downward most often. Don't ignore a pattern because of an unusual volume trend.
Duration	I limited patterns to 6 months, but this is an arbitrary limit I use for most chart patterns.

Figure 2.2 This bearish AB=CD pattern breaks out upward.

Let's talk about the Fibonacci ratios.

BC/AB retrace. Retrace BC compared to the height of BA is governed by the Fibonacci numbers listed in the table. Let's give your slide rule a workout and go through the math. The low at point A is 56.81, and the high at B is 63.85 for a height of 7.04. The low at C is 60.32. I tuned my software to find a turn within .01 (1%) of one of the numbers listed in the table, so we get (63.85 – 60.32)/(63.85 – 56.81) or 50.1%. That value is almost exactly the 50% retrace (.5). So the ABC turn meets the guidelines.

DC/BC extension. If you invert the ratio found in the last step, you use it to find the price of D. In this example, we found the closest Fibonacci number to be .5, so we'd expect point D to be twice as far away. To put it another way, let's pick a point D where the ratio of DC to BC is 2. The high at point D is 67.36, so the equation is (67.36 – 60.32)/(63.85 – 60.32) or 1.99 (or about 2).

We found turn ABC to obey one of the numbers listed in the table, and we also found point D using a Fibonacci extension (one of them listed in the table), so we found a valid AB=CD pattern.

In this example, price turns down at D, just like it's supposed to. However, the drop is brief (to E).

Hills and valleys. I excluded any pattern that had a peak or valley outside of the turns as described in the table.

Volume. Although it may not look like a downward volume trend in this example (F), linear regression says it recedes. In fact, you'll see volume trending downward in most AB=CD patterns and other chart pattern types, too. If volume trends upward, that's fine. Don't throw away a pattern because of an unusual volume trend.

Duration. I imposed a 6‐month limit to the length of most chart patterns, including the AB=CD. It's an arbitrary limit.