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Chapter 17, Part IV. 3-Drive pattern and harmony in classical patterns.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Oct 13, 2011.

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  1. Administrator

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    Part IV. 3-Drive pattern and harmony in classical patterns. [​IMG]
    Commander in Pips: Today we start the final lesson that is dedicated to harmonic patterns and we will speak about the 3-Drives pattern. Also we investigate how harmonic patterns could help us in trading classical patterns, such triangles, wedges, H&S and others.

    3-Drives pattern

    [​IMG]

    Let’s start, as usual, from schematic picture of the 3-Drives pattern:

    [​IMG]


    Pipruit: Hm, I have double association with this pattern, Commander. First one, is it looks like 2 AB=CD patterns, that linked together and that have one common leg. Second, it reminds me EW thrust wave that consists of 5 sub-waves.​
    [/INDENT

    Commander in Pips: What can I say – you’re absolutely right! AS we already know, harmonic patterns also in some sense are fractals. But still they have their own features and qualities, that we have started to discuss.

    As we’ve discussed the symmetry that has to be present in any harmonic pattern – AB=CD, “222”, Butterfly – 3-Drives has no exception as well. In fact, symmetry is a core. As the pattern is more symmetrical, it becomes more reliable.

    Since you’ve already noted, 3-Drives is a relatively simple pattern in structure. It also could be found at any market and any time frame. It consists of three consecutive tops/bottoms and also contains AB-CD in last 2/3 part of it. I’ve marked only A and C letters, just to keep the picture simple. As a rule, the 3-Drives pattern appears on tops or bottoms as a final push before reversal starts. Although 3-Drives is a reversal pattern, it does not mean that after it has appeared - total reversal will start. It could lead to just some retracement in the opposite direction…

    Pipruit: And may be it does have some minimum target that we can count on?​

    Commander in Pips: Well, I can’t say that it will hold for 100% but very often the minimum target of this pattern is a gravitating to take out low/high between 2d and 3d drives. Other words – th market tends to clear the C point.

    Pipruit: I see. That’s definitely what I want to hear, Sir.​

    Commander in Pips: Since the pattern has accomplished, we have to look, how the consecutive move develops. Very often, if this is a real reversal, we can see thrusting action in the opposite direction to the 3-Drives pattern.

    As you can see from the picture above, this pattern consists of 3 consecutive tops or bottoms. Each of them is higher/lower than the previous one. Distance from the drive 1 to drive 2 should be 1.272 or 1.618 expansion, so as between drive 2 and 3.​
     
    #1 Administrator, Oct 13, 2011
    Lasted edited by : Nov 10, 2011
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