Hello and welcome back. So this is module 11. This module we can offer including technical analysis in English, your classical charting patterns. The first pattern that we will be looking at is reversal patterns starting with the head and shoulders. Now hidden shoulders pattern is a common trend reversal pattern that usually plays out near the end of a major major trend. So in other words, the longer the trend has been going on to more level and likely the better will be to identify the head and shoulders we will look for a swing high or low, which will form a left shoulder followed by a correction and a new even higher high or lower low for informing the head and then a strong pullback to get the neckline of the first shoulder for the final swing, high or low, forming that right shoulder and that It will in short of the heart, the high or the low an example of the inverted one and achieved by the information.

So just looking at an example. So here's a few examples that I grabbed off the charts. And you can see so the train is coming up, it's forming this swing high over here, the projection is lower pullback then we move higher. So this such a such as an impulse correction impulse. We are headed squishing higher now than our left shoulder comes back, find some support was back up and then gets rejected again down to the neckline. And this right shoulder is now lower than our middle swing high at this point, forming our head and shoulders is your head is two shoulders and that is what we call the head in shoulder So this is would be a top and the neckline is joined by connecting the two swing lows over here and just drawing a line through that.

And the breakout would obviously be occur when we are breaking below that neckline of the looking to me as an example for the inverted a shoulder action. And here's an example we can see we have our left shoulder, which is that similar pullback followed by continuation of the trend with that next impulse move, forming the head. Then you get a sharp correction. actually starting a trend reversal small pullback, forming natural right shoulder and then we heading back to the neckline and just explain some of the basic psychology maybe behind a shoulder what is basically anemia is we have a trend that is going happening. And now what is happening is also this this corrective move over here, price is no longer to push down to the same level same lows that are able to be in other words, we are seeing more buyers stepping in now than they are sellers in this reverses the trend in this in that showed the pattern.

And as you can see here with this example, as price breaks out of the shoulder neckline here, it actually comes back and retest the neckline. And now you can see how it becomes support and in price hits back higher. On the next slide I have explained to you how you can determine your price targets using the age and shoulders pattern. Looking at the rules, so when trading the insurance pattern, there are some things that you need to mind and the first is that eight must be hard In both shoulders or lower is looking at the inverted in shoulders. And if you were to look at volume and do it using the IBV, that's the unbalanced volume, all the money flow index, the volume on the left shoulder should be higher than that of the right shoulder for a standard in shoulders and lower on the left shoulder.

And I on the right for inverse in shoulder. So if that doesn't make sense, my bitches read it through carefully, as it should make sense. If the slope of the head and shoulders neck on our counter trend is set to have a higher success rate, but always wait for the breakout and retest, at least it's possible at the breakout target of the Asian shoulders or equal to the distance between the high for top one low for bottom and the neckline. So just going back to an example I'll show you what I mean. So this is an inverted in The shoulders so it's a fun show the bottom. And the target is the rock by calculating the distance from that low from the 80 to the neckline and then projecting it straight upwards.

And so that will give you a target and it can show this almost always reach the targets if they continue. And so your target in this instance will set around today and I think that's the reason I included that last green candle. So it see how the price actually do go and reach your target. And also what I meant with the slip. So you also did breakout is moving in that direction and the slope is also in that direction. So apparently that increases the chance of Jaden shoulders playing out in this example.

Then the knee clan is not moving in the direction of the reverse. It's moving with the original train but not the reverse. But stole the show does play out and dating show that is quite a reliable reversal pattern. The next reversal pattern that we'll be looking at is that of the double top or the triple top, or in the opposite side of that double bottom or the triple bottom. And as the name implies, it is simply a set of either two or three tops that meet a rater assistance and then breaks down below the neckline support. On the other end of the spectrum two or three bottoms that meet support and practice often ignored resistance.

The triple top button is actually similar to the head and shoulders, but in this case the head would be at around the same level as the two shoulders and as for reversal patterns, they should actually be trained to reverse so you would not see this pattern in the on any trend actually going on. So you look for the specimens at the end of a trend. And that's what they are for the reversal better. Now after a break and retest and economic progress can be calculated by extending the distance between the neckline and the upper support for tops or for from a neckline and resistance for bottoms, you can get an example. Here is a example of a double top. As you can see, it looks a bit flattened out in this example, but that's just because I wanted to include this if I indicated to show you I'll do maybe identify high probability breakouts using your image.

So yes, it is a double top this one top to top and I just met a notice that the triple top first except in exact same principles of I will see three tops instead of two. So for the double, and triple You're up to the invisible fly. So if this were to be a triple top, you'd see one top to top in another fit top. But is it just a double top says one, two tops. Again so you see the neckline that is forming the initial support and then the top on the same level around the first stop and then we break through the neckline. You can see very small pullback to retest the neckline break meaning price is rejected.

This is a four hour chart remember at Lisa that is quite some you can imagine in a one hour chart intensive with some decent tree based action happening over the days your target if we break down the target is calculated using the distance from the top to the bottom of the neckline and then you projecting that downwards to get you to a price target level. You You can see that the neckline briefly acts as resistance. So as price comes down and meets the target goes back up that now becomes the neck. The neck line it used to be support now becomes resistance. And in this instance after the talk was completed CFE price moves, probably sideways for a while here, we'll be consolidating, before further breaking down. So what I'd like to point out here on the indicators is just how the image is decreasing, indicating loss of interest.

So looking at the first stop at a VA, you can see that you have quite a lot of activity. Volume wise around here, when we look at when we get to the second top, now we have lots less interest and volume happening. So you've actually seen that lost interest and that's why we are seeing this force. price declines. And then after we reach our target, it CL interest returns and the mfr increases again. Now to play it safe, so just wait for a retest of the neckline.

So for instance, if this breaks and closes below V, I wouldn't necessarily recommend immediately can short, maybe wait for that rejection happening. And maybe you can have a look on the level down from just to see the price action. But you ideally want to get that confirmation for gunshot because if this pattern fails and goes up, again, maybe going through or maybe failing, completing and wishing of higher, you don't want to be a trapped short here as that would be called a bear trap. And then as people are covering this shows you squeezed in for us we'll just move further further up. So your frog is safe and wait for that. Read this The last reversal pattern that we will be looking at is called the diamond reversal pattern.

Now damage reversals are basically offset the head and shoulder vessels if you were to look closely, and they tend to form near the end of a trend, usually after strong final move in the direction of the original trend, these reversal patterns are statistically very reliable. But in the event we have broken does occur to the opposite side. Or if it starts pulling back soon after the initial breakout, rather flat sides and exit, any open positions that you might have and maybe wait for swift break down the tissue broker in those instances, I'll explain what I mean by this. Now looking at this example on the left. So yes, that strong, final move down. So think of it as like a almost like a heat wave.

Five moves so far, five to five, wave down five and then it's like an ABC correction that being your a disease, wonder if you can remember, a B seat maybe in the butt. So to draw the triangle up into what you should look for that sharp down move and so this will be in a downtrend, I get that correction and move lower down in a move back up small correction and this is what also looked like a consolidation. So you'd have this consolidation before a breakout. And what I meant with the offset in shoulders if we were to extend that neckline, it See how that actually forms a left shoulder, a head and maybe a right shoulder. So dominant patterns is to some extent similar to similar to hidden shoulders. Thinking of it in terms of Elliot, Elliot wave move So this was the end of our downtrend, when we see that ABC correction, maybe this could be a start of a new Elliot wave, Elliott, five wave setup, not now reversing price being like and maybe a wave 123 for instance if you extend that last diagonal support onwards, it will become future diagnoseable.

So if you extended this line and price comes back to it, it probably see price respecting that neckline and then just explain what I mean here with if it were to fail. So as prices coming down, moving up, coming back down, back up, if price were to break down yet towards the bottom, there's a very good chance that you might even see a new, low forming in this example. And indeed you'd see stock price. Stock failing again, fast moving up And you'll probably be able to catch a long position around maybe that area around here. So rather if price breaks to the bottom and set upwards in this example we're coming from a downtrend rather execute positions and then wait for a break of that level before going along okay. Looking at flags and pennants, so, haven't really looked at some of the prevailing market structure for this like you can moko and Elliot wave theory, it is now a good time to just use what I call the layman structures.

And before I explain what they actually are, here is a quick overview of what is called what's called flags and pennants. So that Yeah, so the blue line would represent price and stubble dashed line, and black would represent just the structure. So coming up with maybe an employee Move yeah that's like five or whatever of it is wave that that represent the flagpole. So there's a flagpole, you can see and then your flag. So, this is example a British flag. So, you have the strong move up and you have a b a b c d e, correction, ABCD correction and then you continue onwards.

That is a blue flag because this pattern usually plays out to the upside. And the opposite is the perfect we come down to this down, move ABCD correction and then we continue to move on move downwards. Here we have a blue flag descending once again, the greater scheme of things such as a big impulse move with a corrective move, but think of it in terms of Elliot waves, six sec corrections at ABC, the E or just a, b c And then moving up. So that is a blue flag descending. And so your blue flag moves up to you, you see see it, it pulls back and then moves up whereas a bear flag will come down and installed SQL Server right to the side and then breaks back down to payment. Pretty much the same as the blue flag descending.

But instead of being squeezed flat, I think you'd see it consolidate. Do this funnel before breaking maybe upwards continuing the trend and same with the pair of pants comes down consolidates and it breaks to the bottom. So if you haven't already picked it up, I'm sure you can see that all these structures are simply corrective moves or waves, with the flagpole being the impulse wave and that is it. There's no need to overthink it. These structures are all over the market and and using simple And manages like flags and pennants just makes it easier to spot them. So what do you do if you spoke to instructions?

Well, since they are representative of production rates, you would ideally want to trade the breakout in the direction of the original impulse wave, as this can get you on board the next way. Just be careful as these structures can be very deceiving. Oftentimes providing false signals trapping traders in the wrong direction. And for this reason, it remains remains imperative that you look for Confluence with other major support or resistance levels. And remember, waiting for retest is always wise, I'm just gonna quickly move to our Euro USD chart and maybe just show you what I mean with those settings. So there's an example of a Bear Flag.

Very, very easy to spot. So there's your bowl, there's the flag, and then again, you have you move down. So in this this case, obviously, no read Notice there's no replaced the one hour time frame at least. But we were on a major level here and looking at some of our other indicators like our Kimbo arrogated instance here it see that we are still in a strong downtrend. There is another one see the market is full of them literally getting all over the show there is a full day's correction. So, you know the snares are simply the corrective moves in a train.

So that's all you need to look for. And using analogies like the extra pins just like makes it a bit easier to identify them. Next we will look at wages both ascending and descending. Now your arising or sending which arising which was before the situation of Which is also called a decent English. The person gets his name from the way it wages up forming higher highs and higher lows or down forming lower highs and lower lows was also important and that is the way that price consolidates into a tighter joining range as listed as the entity which now generally a falling wedge which is like the example and like this one I'm showing you here, break upwards and rising wages were if they were to move upwards, they will move it would break to the downside. So it breaks to the opposite side that is actually pulling in.

Okay. So what to look out for. Okay, so first off the target again once we get a breakout targets is defined by looking at what to wage the base to the so that that scores the base, and that was just projected upwards from your breakout level to meet your target and you can actually see out in this example it did meet the target. It also notice our previous support becomes the right label. So as the switch progressed finding resistance here, obviously for which the form you need at least, to swing, at least two swing highs in two single letters before that, which actually starts forming so only at this point around about, could you really start drawing that which and then you can see out starts to form and respect those diagonal lines. And what I want to point out is how the support of the year overdose broken actually became that breakout level.

And as we move down, we found find some support you at the bottom of this, this level. Let's see the price rejection, we move back up that support now becomes resistance move back down again being rejected from the bottom of this diagonal support, then we have a move up. And that structure the as you know well are we having read on the module with Bollinger Bands is actually a Bollinger w bottom if you were to add your bollinger bands in here, it's also a double double bottom that we've also discussed. You can see the double bottom and then the breakout occurs there is a small retest as you can see that after that, retest is maybe a good time to enter. And you can use this breakout level just below maybe as a stoploss area and in there to calculate your target. Target is calculated using this base height of the year is the Sending rich for sending rich or rising which exactly the same will apply and it will just be inverted.

So the price will be start consolidating upwards in and break down. triangles so triangles triangle patterns can be either a continuation or reversal pattern, but statistically there are more likely to be continuation patterns. The two primary triangle types include the symmetrical and supporting triangles, and we just can also be considered to be triangles but as we come in separately, I've been not going to cover them again. triangles form when price action narrows into a tighter trading range, forming swing highs and swing lows. And after the formation of at least two swing highs and swing lows similar for which a triangle pattern was thought to emerge and become visible. Should you draw use trend lines to connect as you know as to net these straight lines now becomes a support resistance Have a triangle pattern and the profit will occur when price breaks out and either the upper or lower fall of these triangles.

Again, be careful for false breakouts and always look for major label confirmation. So again, for as far as you have an example of triangle yet the first one to be looking at is the symmetrical triangle. Now symmetrical triangles when seen in the light of its Elliott Wave says ABC, the corrective wave will usually be a sign of trend continuation. So if trends were moving upwards, you could see that as a b c, correction before the price continue onwards, but as for triangles and wages, using the MSI and looking for signs of the Virgin's or rather the lack thereof, is maybe a good way to get a bit idea with a breakout model. So in reality often much difficulty finding a good example of a symmetrical breakout, I did find this one and it was a failed breakout and it will actually hopefully act as a sign of caution when you are trading these structures.

So it's a loop. So again first and you can see the is your first swing high your second swing I your your first now your second simulation and yet around the this point here would you be able to draw your your triangle and you can see the prices starting to consolidate into a tighter trading range. And now you can see that over the year price is starting to respect that diagnosis. And we even see price start to respect this lower diagonal forming you which now constantly at this point you'd start looking for breakouts either to the upside or the downside as symmetrical triangles can can be as a continuation pattern or reversal pattern. You're not doing the way the breakout occurs. But something that I showed you is that you can use the money flow index and live agents to maybe help you find to be the break up.

So, as you can see, price comes down into this area and I just want to show it to you didn't move up. And the first the first real taste actually I think occurs around here, because you only really defined your triangle at this at this point. So that was your second. So there was a second swing learned that the second swing is at this point you have to find your triangle. So as price came down to this point, you can actually try and look what the image is doing. So comparing debt low was that low indicates you can see the indicators flat.

Whereas the the price has moved to the higher, so making a higher low and indicator as not does not have a higher low. So that is actually divergence. And as we know, with this classical bullish divergence, you'd be expected expect price to move up and a lot. So, obviously, due to divergence, I would not be looking for a breakout to the downside here. So as price is now moving up again, we're starting to looking for divergence. As we approach this level, I just, I just look to the left to around this point, I can see there was a higher high and now we have here in quite a surprise to him.

And inviting the image is moving lower, and we all lower. So actually, there's a lack of the vision that is present at this at this point. So that might integrate to a breakout and this one actually did. So we did have a breakout, the full target was not reached. So as you can see the basis quite, quite large. And having projected that upwards to the level where if that would have ended up, it did not reach that level.

So this sort of failed breakout. And we actually stopped short just just above the previous resistance. It's very possible that we actually had a major level around here as well. That might have stopped this breakout extract. So you can see how it immediately reverses back into triangle consolidates maybe in forming a new triangle breaks out gained fund support around the table, forming something like an initial this some extent, even a triple top maybe depending on how you look at it. And then you can see prices just hitting back down.

Adds an example of a flat top triangle. So this is an example of a flat top triangle. The in inverted example, this would be the flat bottom triangle if you were to flip this upside down a flat top of that bottom triangle, so not much, not much dissimilar to symmetrical triangles, and image in most regards, are oftentimes painted as danger bright towards the flat side. In other words, a lot of literature and information out there will tell you that effect of triangle will tend to break to the upside, but are based on my own observation, the longer the price stays in the triangle, the more likely it becomes to roll up right to the small thing ah, as with this example, so your triangles is not real. And for preference can break to any side and that's why Use this image technique within to fly with a suspicious person present or not to maybe help identify a breakout.

And remember that if this were to be arising, which others you've seen higher highs, so price has been consolidating upward, that would have been more level down, right. Whereas if this whole pattern we do move downwards, stepping down to four descending, which see people break up with, but sign up this exam example. So, we would have started to define this triangle around here because that would be our second swing I and these are second swing, you know, so at this point, at this point, you've extended that support diagonal and they would form the horizontal resistance cycle. So at this point, we have Coming down coming down and not really touching if the trend support resistance line so yes the first time we actually reaching either up or down level so we'd start looking for a breakout. So reaching this point it's see what what is the aim of it.

So, we need to go back to the previous low. So we see our previous low was actually higher low on the price and on the indicator we actually had a higher a higher lower. Now, meaning we do have divergence presence. That means we are more likely to see a price reversal and we did see a price reversal in price did not reach the upper resistance it actually came back again and threatening a breakout. So again, we need to look down. So previous previous levels now I will not short where I start.

The image is also lower. So at this point we did not see that variation. So at this point you can start looking for a breakout to the bottom and nothing is indicating that we should diverge and go up. So at this point, you can start looking for a breakout to the bottom, you did not see a breakout, we actually moved up, and then we came back down again. Looking at price, we had a lower low to the left. And looking at them it's also low, low to lift again, no divergence.

So gains, so to look for a breakout to the upside. Then we had price move, he rejected move up. And actually it's up here and there was actually some virgin spray prison. So he had a higher high and lower, pointy so we did see some agency. So these are high design that's higher. Our highs and indicators should lower highs.

So that is a vergence meaning prices. has been going to be rejected and said we're and and actually that is when you've got your your breakout to the downside Okay, so, harmonic patterns introduction, harmonic patterns like geometric price patterns to the next level. And that is by using Fibonacci numbers to define a project mathematically precise models based on Fibonacci extension extensions and retracements. Now, the first monic pattern was identified by h in got as far back in 1932 and he described the four first five point harmonic pattern that we see today and now as the gartley pattern. Now, it's actually only around Bhante 98 to 2008 that Scott Connie starts to do some work on this as well and he fitted the Father monic patterns and Especially in his book, the harmonic trader and he started adding Fibonacci levels into the mix. Now, the primary theory beyond harmonic patterns is that price and bond movements which adhere to Fibonacci ratio relationships, and its symmetry within financial markets is something that can be replicated throughout various aspects of nature as well as the financial markets.

So using these ratios and geometric patterns. Using these ratios, geometric patterns are being projected, providing traders with potential turning points in the market long of stock levels and price targets. So now let us have a look at some of the most popular patterns. The first pattern and the most simple of lot is called the ABCD pattern. It's quite simple. You are looking at a impulsing You are then looking at the correction link.

So this is your identifying this. And in hindsight, so this is the nice thing about harmonics. It's patterns that you can identify in hindsight. And then based on that structure pattern you're looking for a reversal area. So you look for this impulse link, followed by correction lake that is a 61.8 Fibonacci retracement of that a B Lake, and then another impulse lake that moves higher and do the hundred and 27.2% Fibonacci extension level up here. And that is where you start to look for your reversal areas up.

Around this point, you can start using price action and start looking for your shorts and try to get short in the market around this area. isn't an example of the opposite. That is one way it comes down. So you have this impulse a correction 61.8 retracement and in the impulse Lake down there are some rules. So the rules are that your A B impulse a must equal your CD impulse leg. So that's the first rule.

And then also thinking back to ECMO wave theory comm go number three, the time it takes from going from A to B must be similar to the time it takes from C to D. So this takes twice as long as that that actually breaks the rules in this pattern becomes invalid. But if you do see that this pattern plays out of that perfect 618 percent retracement level followed by an extension to that hundred and 27.2% Fibonacci extension level and your AB impulse the equals your CD inputs like and the term from ATP from the CD, you can actually start to expect that reversal and ABCD pattern is The simplest of all the harmonic patterns. And, and that's a good place to maybe start to practice identifying these structures. As the next patterns that we'd start to discuss, especially often the next one actually start to get mathematically very tricky and difficult to identify.

Looking at an expense in the free draft pattern, now the feeder pattern actually just a continuation of the ABCD pattern, adding one more correction late followed by a third impulse leg, all the same Fibonacci levels and rules of the ABCD patterns still apply. So what you can see is still at the normal A, B, C, D pattern, but we actually have this additional three A, B, C, D, and and we have another correction or the impulse. So again, that would be a 61.8 retracement of that move. And that would be the same I'm an entrepreneur 27% extension of the and that would be the new reverse area, the rules are still the same, a B must be equal to A, B, C, D, and then. So yeah, all three, those must be the same and the time from day to day and from the must be the same.

So it's just an a triple ABCD better. Now getting into the more advanced harmonic patterns, and the first one the call to action, this is the one that gartley originally defined the five one pattern and in that Connie Scott, Connie added the Fibonacci levels to that that these patterns are reversal corrective patterns, and you can usually only occur of the strong impulse wave now. It's a represent your impulse wave. And I'd like you to think back to the ABC corrective wave pattern that was distraught Elliott Wave. Now, I'm not going to take you through all the math of how to define these. If you want, you can pose you can try and have a look.

But as you can see, we're not purely sticking to Fibonacci levels at this point. But you're all these waves need to adhere to these very specific mathematically precise rules in order to be valid. And, and when it comes down to is you identify this ABCD pattern, and then at point D, you'd start to look for that long, long trade for the bullish coffee or the short trade for this bearish coffee at point B. So you can go and have a look at those rules. And then Is your quarterly pattern the next pattern and according to Scott, oni it's called the crab and it is apparently the most accurate of the harmonic patterns and that is due to the deep correction of the potential reversal zone. That's just a fancy name for that point.

Point D, you can start to place your loan holders for a bullish pattern or sell restore bearish pattern and retracement of point D in the example of the crab is 161.8% Fibonacci extension post league x. So in other words, you're looking at this impulse lakes lake of exci and then you're going for that Richter Lake be smaller at BC lake and then a massive, massive correction past your initial x leg and that is why this is such a I can be so loud that in or epithets in is due to the very deep pullback meaning you can really set up a good risk reward ratio at this point as your stock was going to be really bad and your potential target good multiple interest reward reward ratio, you can ever look at the rules and again this is the crab pattern and each and every aspect of this needs to be strictly adhere to, for it to be a valid pattern to identify.

Next time monic pattern as the baton is booked Connie reviewed this person is one of these lighter lighter harmonic patterns that he identified. It is defined by this 0.86 retracement from A to form the potential reversals. So if you look at x if your vs and This 0.86 extension very close to your starting impulse late BCD some retracements in between and it's even if you see I actually wrote it out for you in pseudocode because depending on the retracement of a PC in relation to a B, you're either going to have C D calculated this way or C D calculated that way. And the last Amani pattern that we will be looking at is the butterfly. The butterfly monitoring was created by Bryce gumo and is defined for it's 0.786 retracement from x A to 4.8 you can see it's a very deep retracement that's 0.7 point 6% retracement from point B.

And if defined correctly, this person has a large stock price a life or decent setup. So you're here you can see your Fibonacci retracement and extensions to form point D again you have a very deep retracement past your initial point here with and undred and 27 or 161%. Extension post your starting point to get you into label to go long or short for your very short proofs are as follows and you're welcome to have a look at these. And yes, so these are money patents are quite advanced, quite tricky, difficult to identify and not something I personally retried. There are some nice systems out there and indicators that can help you identify these. But some of the criticism of these systems include that due to the mathematical complexity and precise nature.

It is your it can be tricky to correctly identify them. And yeah, that concludes our money fattens as well as Module 11 Thank you very much. If you have any questions, you can mail them to me at info at effects automate.com I hope you enjoyed the course so far.