Graphical models are in a wide use both: for the analysis of the quotes on the screen of the terminal and with the charts of the method "Tic tac toe". They don’t give any guaranties regarding the directions and purposes, but quite often recommendations, based on these models give positive results. The principle of the method is based on the ratio of the supply and demand. The result is then leads to the graphical image, analysis of which allows trader to plan his orders.
The increase of the price is shown on the Pic 1, after which the correction as long as 3 cells takes place, after what the price increases and reaches the level of the first column of the crosses. This figure is called Double Top. In case in this moment the number of the sellers prevails over the number of the buyers, then the price will rise over the first top. If the buyers win, than the price would rise under the first top. From this example we can see that the price has increased, let’s place the cross above the previous top and this is the signal to buy. Further price increase is most probable.
You can see the example of the Double Top, which differs from the previous one by the fact that the price has hit one price twice and has fended from it, creating the horizontal Support Level, on the Pic 2. Then the price, after fending, punches the former bears’ Resistance Level (inclined), reaches the top level, creating second and punching it. This is the signal to buy, which is by the way stronger than in the last example.
Double Bottoms
Double bottom is the figure, reverse to the Double Top figure. It appears upon the decrease of the price till the level of the previous bottom. The break of this level is the signal to sell.
The example on the Pic 4 shows that when the price after rising, bounces up to the length of 4 zeros. This is followed by the breakdown to the top (note the resistant level on the angle of 45 degrees) and the forming of the Double Top figure. But the sellers appeared to be stronger. The breaking of the figure does not take place, there is no signal to buy and the price goes down. Then the breakdown of the Double Bottom takes place. The Double Bottom figure with resistance is much stronger than the previous one.
Picture 5 shows the situation, when the column of the zeros finishes over the previous and the column of the crosses has the rising bottom. It reaches the level of the previous top and breaks it, giving the signal to buy. This case demonstrates the weakening of the sellers on the market. The buyers take up more and more. This model is stronger than two described earlier. Upon noticing it, trader has more basics to assume the price raise.
Double Bottoms with the descending top is the figure, opposite to the one, described earlier. We can see the weakening of the demand and the strengthening of the proposal. This figure is stronger than two previous bears’ models.
Triple Top
The Pic 7 shows the situation when the price describes the double top and doesn’t break it. The price bounces, but after it, is rises upper than two previous tops, giving the signal to buy. The more the price bonuses from the support line, the more is possibility of breaking down of the resistance level. Increasing bottom also strengthens the possibility of the rise.
Triple bottom is the opposite figure to the triple tops. The demand is weakening, the supply is increasing.
Catapult represents the synthesis of the Triple Top and Double Top. On the pic 9 we can see the model of the Triple Top. There is the signal to buy. This is followed by the bounce with the bottom one cell higher and the retreat. As a result, we have Double Top, which the price breaks. The rising bottom characterizes the demand strengthening. Double Top confirms the signals of the strong figure Triple Top. I.e., the Catapult model is the strong figure. We can open the buy order with the stop loss near the bottom of the last crosses column. After the Triple Top transforms into Catapult, we can open one more buy order and both stop losses to place near the bottom of the newly created crosses column.
Opposite model to the Bullish Catapult formation is shown on the pic 10. It’s the synthesis of the Triple Bottom and Double Bottom with the reducing top.
Triangle formations represents rising bottom and decreasing tops. Model has to have not less than 5 columns. The battle between buyers and sellers is going on and someone has to throw in the towel. So, we can only wait for the price outputting from the Triangle. If the break to the top appears, we can clearly see the Double Top. We know what to do after. If the price breaks the figure down, the Double Bottom will be formed. We also know this figure. We can wait for the outputting from the triangle, or we can place the pending orders in both sides. This is just the details of the strategy, which you will build, based on this method "Tic tac toe". There are different variations of the described models. Primarily, you have to learn the main figures, which is not hard. In the future, you will easily recognize them and come to corresponding decisions. While working with each another method, the most important is to understand, what you are doing, don’t make hasty actions, work exactly by the strategy, conduct correct the money management.
by , 2017.12.14