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A Weekly Magazine
Oct. 30, 2017
Chart Patterns & Algo. TradersuriNotes.com’s
Trading Dragon Patterns
CHINA STOCKS
●Daily/Weekly/Monthly Analysis
●Auto Generated Chart Patterns/Analysis
●Algorithmic Trading Analysis/Results
●Relative Strength Ranks
Chart Patterns & Algorithmic Trader 2017 ALL RIGHTS RESERVED
No part of this document may be reproduced or transmitted without the express written consent of thesuriNotes.com or Suri Duddella.
This document relies on sources and information reasonably believed to be accurate, but neither the author norpublisher guarantees accuracy or completeness.
The examples in this document could be considered hypothetical trades.
The CFTC warns that:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OFWHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNTWILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT,THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCERESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULARTRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTSIS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION,HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICALTRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK INACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TOA PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTSWHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUSOTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OFANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THEPREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CANADVERSELY AFFECT ACTUAL TRADING RESULTS.
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Data & Charts are created by TradeStation Software from TradeStation Securities.Published in the United States of America
All the material in this document is provided as Educational Material only.NONE of the chart patterns or chart setups or all other material in thisdocument are trade recommendations. Trading is risky. You are 100%responsible for your own trading.
Trading is risky. You are 100% responsible for your own trading. suriNotes.com orSuri Duddella, specifically disclaims any and all express and impliedwarranties. Your trades may entail substantial loss. Nothing in this documentshould be construed as a recommendation to buy or sell any security or otherinstrument, or a determination that any trade is suitable for you.
Chart Patterns and other material in this document are Auto generated in TradeStationsoftware and we try our best to check for errors and data consistency, but they may stillconsist of data or algorithmic errors.
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US Markets
Patterns Gallery
Chart Patterns
CHINA Stocks
Stocks/Futures/Commodities/FX
Earnings Next Week/Charts
Weekly/YTD Relative Performances
Hot WatchLists
Bullish/Bearish, Momentum, Relative
Strength
Key Levels:
Key Supp/Resistance/Pivots Charts
GAP Charts
EDUCATION
Symbols Universe
Books/Websites/Software
ALGORITHMIC TRADER
Table of Contents
Chart Links■CTRP AB=CD Pattern 11
■CTRP Head and Shoulders Pattern 12
■JD Head and Shoulders Pattern 13
■BIDU ABC Bullish Pattern 14
■NTES Parabolic Arc Pattern 15
■NTES Head and Shoulders Pattern 16
■YY ABC Bullish Pattern 17
■SOHU Inv. HS Pattern 18
■BABA ABC Bullish Pattern 19
■UPS Cup & Handle Pattern 21
■LULU Rectangle Channel 22
■ALK Parabolic Arc Pattern 23
■BAC Bullish Cypher Pattern 24
■PG Bearish Butterfly Pattern 25
■GOOG Rectangle Channel 26
■STMP Cup & Handle Pattern 27
■USO Inv. HS Pattern 28
■SWKS Cup & Handle Pattern 29
■AVGO Parabolic Arc Patterns 30
■ULTA Parabolic Arc Pattern 31
■VRSN Deep Bearish Crab 32
■IBM ABC Bullish Pattern 33
■EXPE ABC Bearish Pattern 34
■@BP ABC Bullish Pattern + eSix 37
■@O Head and Shoulders Pattern 38
■@AD Bearish Dragon 39
■@KC Falling Wedge Pattern 40
■@W Double Bottom Pattern 41
■@SI Inv. HS Pattern 42
■@DX Inv. HS Pattern 43
■@SB Descending Triangle Pattern 44
■@FC Bull Flag Pattern 45
■@JY Rectangle Channel 46
■@QM Inv. HS Pattern 47
■@GC ABC Bullish Pattern 48
■AUDJPY Inv. HS Pattern 50
■AUDJPY C&H Pattern 51
■AUDUSD in ABC Bullish Pattern 52
■AUDNZD in Double Bottom Pattern 53
■CADJPY Inv. HS Pattern 54
■GBPNZD Cup & Handle Pattern 55
■GBPAUD ABC Bullish pattern 56
■EURAUD ABC Bullish Pattern 57
■EURCAD ABC Bullish Pattern 58
■EURJPY ABC Bullish Pattern 59
■GBPJPY Bull Flag Pattern 60
■GBPJPY Channel Pattern 61
■DVN ABC Bullish Pattern 77
■IDXX ABC Bullish Pattern 78
■INCY Parabolic Arc Pattern 79
■CTRP AB=CD Pattern 80
■GRMN Symmetric Triangle Pattern 81
■GRMN ABC Bullish Pattern 82
■OLED ABC Bearish Pattern 83
■PFE Symmetric Triangle Pattern 84
■SBUX 2B Top Pattern 85
■TSLA 2B Top Pattern 86
■ULTI Inv. HS Pattern 87
■YELP ABC Bullish Pattern 88
Major Markets
Patterns Gallery
Major
Inde
xes %
Chg Y
TD
CHINA STOCKS
CHINA Stocks
CTRP (Daily, Earnings: 11/1/17) is trading in AB=CD Bullish pattern. AB=CDpatterns complete when price reaches 100%AB range (44.43). Some AB=CD patternsextend to 127-162%. Currently eSix is still red and pattern reversal needs to beconfirmed by eSix for potential trade (upside).
CTRP AB=CD Pattern
CTRP (D) HS Pattern (F). Short entry below 51.78, Stop above 54.12 (-2.34), Target1Zone: 46.3 to 44.8, Target2 Zone: 40.5 to 37.4. Also, notice a clear negativedivergence (eSix) in CTRP from left-shoulder and head levels.
CTRP Head and Shoulders Pattern
JD (D) HS Pattern (F). Short entry below 39.33, Stop above 42.63 (-3.30), Target1Zone: 33.4 to 31.7, Target2 Zone: 27.1 to 23.7. Notice negative divergence betweenLeft Shoulder and Head levels with eSix.
JD Head and Shoulders Pattern
BIDU (Daily) completed its ABC Bullish Pattern final targets (257-272). BIDUcompleted its Price/Time Projections in its final target zone. BIDU is also trading inSymm. Triangle pattern.
BIDU ABC Bullish Pattern
NTES (Weekly) is trading in Parabolic Arc pattern. There is no clear trade entry usingthis pattern at this time.
NTES Parabolic Arc Pattern
NTES (D) HS Pattern. H&S Patterns re only valid when price closes below neckline.Short entry below 259.44, Stop above 277.50 (-18.06), Target1 Zone: 211.2 to 198.0,Target2 Zone: 160.2 to 132.9. See negative divergences in left shoulder and headlevels with eSix.
NTES Head and Shoulders Pattern
YY (Earnings: 11/20/17) is trading in ABC Bullish pattern. See Price and TimeTargets.
YY ABC Bullish Pattern
Above charts show SOHU Inv. HS Pattern from April 2017 to Oct. 2017. SOHUtraded above Neckline $43.60 with a bullish eSix signal. Target ranges: $50-52, $57-61, $68-72. The second chart shows SOHU reached 3rd target zone $68-72.
SOHU Inv. HS Pattern
BABA is trading in ABC Bullish Pattern. Long entry was above $88. Price Targets108-114, 132-145, 169-182.
BABA ABC Bullish Pattern
Chart PatternsStocks/Options/Indexes
UPS is trading in Cup & Handle pattern. Price is trading above breakout level(120.44). Target levels: 127.40, 131-134.
UPS Cup & Handle Pattern
LULU (Daily, Earnings: 11/30) is trading in Rectangle channel. Watch the upper andlower trendlines of the channel for potential breakouts. Targets are marked in shadedareas.
LULU Rectangle Channel
ALK (W), is trading in Parabolic Arc pattern.
ALK Parabolic Arc Pattern
BAC (Daily) is trading in Bullish Cypher Pattern. Cypher patterns are the mostsuccessful harmonic patterns. Long entry was above $24.
BAC Bullish Cypher Pattern
PG (Daily) reached its 2nd target zone in Bearish Butterfly pattern. Short entry wasbelow 93 with a stop above $94.68. First target zone is 89.5 to 90.5, second targetzone: $94-96.
PG Bearish Butterfly Pattern
GOOG (Daily) is trading in Rectangle channel pattern. GOOG upside breakout level$997. Targets: $1044-1091.
GOOG Rectangle Channel
STMP (Daily) is trading in Cup & Handle pattern. STMP C&H Breakout level:$220.25. Targets: $233, 241-247. Stop below 212.
STMP Cup & Handle Pattern
USO (D) is traidng in Inv. Head and Shoulders pattern. Price is currently tradingabove Neckline (10.32). Target range: $11.35-11.63, $11.99, $12.44-13.03.
USO Inv. HS Pattern
SWKS (W), Earnings: 11/6/17 is trading in Cup & Handle pattern. Breakoutlevel:$112.88. Targets: 135, 149-158.
SWKS Cup & Handle Pattern
AVGO (W) is trading in Parabolic Arc Pattern. No trade trigger yet.
AVGO Parabolic Arc Patterns
ULTA (W) is trading in Parabolic Arc pattern. Parabolic Arc patterns are long-termchart patterns. ULTA Short trade was below $250. Targets: $198, $124-162.
ULTA Parabolic Arc Pattern
VRSN (Daily) is trading in Deep Bearish Crab pattern. Pattern completion zone is$110-115.
VRSN Deep Bearish Crab
$IBM (W) ABC Bullish Pattern. The eSix trend is still not favorable. Long Entryabove 144.20, Stop below 139.12 (-5.08), Target1 Zone: 179.9 to 190.9, Target2Zone: 222.8 to 245.9
IBM ABC Bullish Pattern
EXPE is trading in ABC Bearish pattern. Short entry is below $151. Target ranges:$136-140, $117-125. Stop above $154.5.
EXPE ABC Bearish Pattern
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Chart PatternsFutures & Commodities
@BP (D) ABC Bullish Pattern Long Entry above 1.3208, Stop below 1.3047 (-0.0161), Target1 Zone: 1.359 to 1.374, Target2 Zone: 1.416 to 1.447. The underlyingtrend (eSix) is still weak for pattern to materialize.
@BP ABC Bullish Pattern + eSix
$@O (D) HS Pattern (F). H&S Patterns are only valid when price closes belowNeckline. Short entry below 230.0, Stop above 256.4 (-26.4), Target1 Zone: 173 to157, Target2 Zone: 113 to 80
@O Head and Shoulders Pattern
@AD (Australian Dollar Futures) is trading in Bearish Dragon pattern. Entry is below0.7909. Second entry is below Hump level 0.78. First target range is 0.7528-0.7654
@AD Bearish Dragon
@KC (Coffee Futures, Weekly) is trading in Falling Wedge pattern. Falling Wedgepatterns are bullish only when price trades above the upper trendline. ESix is currentlyred and in negative zone.
@KC Falling Wedge Pattern
$@W (D) ABC Bullish Pattern Long Entry above 436.7, Stop below 423.5 (-13.2),Target1 Zone: 449 to 455, Target2 Zone: 475 to 489
@W Double Bottom Pattern
$@SI (D) Inv. HS Pattern. Long entry above 17.896, Stop below 17.121 (0.776),Target1 Zone: 19.54 to 19.99, Target2 Zone: 21.28 to 22.21
@SI Inv. HS Pattern
@DX Inv. HS Pattern
@DX (D) forming Inv. HS Pattern. Long entry above 93.085, Stop below 92.838(0.247), Target1 Zone: 94.52 to 94.90, Target2 Zone: 96.03 to 96.84
@SB (Daily) is trading in Descending Triangle. Watch upper and lower trendlines forpotential trades.
@SB Descending Triangle Pattern
@FC (Feeder Cattle Futures) is trading in Bull Flag pattern. Targets are $159-161,168-174.
@FC Bull Flag Pattern
@JY (Daily) is forming Rectangle channel. Watch upper and lower trend lines forpotential trades. Potential target levels are shown in green shaded areas.
@JY Rectangle Channel
@QM (D) Inv. HS Pattern. Long entry above 51.375, Stop below 48.875 (2.500),Target1 Zone: 56.44 to 57.82, Target2 Zone: 61.79 to 64.66
@QM Inv. HS Pattern
@GC (W) ABC Bullish Pattern Long Entry above 1203.3, Stop below 1139.6 (-63.7),Target1 Zone: 1342 to 1397, Target2 Zone: 1556 to 1670
@GC ABC Bullish Pattern
Chart PatternsFX
$AUDJPY (D) Inv. HS Pattern (F). Long entry above 86.697, Stop below 84.090(2.608), Target1 Zone: 95.59 to 98.01, Target2 Zone: 104.97 to 110.01
AUDJPY Inv. HS Pattern
AUDJPY (Daily) is trading in Cup & Handle pattern. Price needs to close abovebreakout level for pattern to be valid.
AUDJPY C&H Pattern
$AUDUSD (D) ABC Bullish Pattern Long Entry above 0.77420, Stop below 0.76551(-0.00869), Target1 Zone: 0.8147 to 0.8281, Target2 Zone: 0.8666 to 0.8944
AUDUSD in ABC Bullish Pattern
$AUDNZD (D) ABC Bullish Pattern Long Entry above 1.04236, Stop below 1.03630(-0.00606), Target1 Zone: 1.0795 to 1.0912, Target2 Zone: 1.1250 to 1.1495
AUDNZD in Double Bottom Pattern
$CADJPY (D) Inv. HS Pattern (F). Long entry above 88.789, Stop below 84.679(4.111), Target1 Zone: 97.43 to 99.78, Target2 Zone: 106.55 to 111.45
CADJPY Inv. HS Pattern
GBPNZD is trading in Cup & Handle pattern. Price is above breakout level (1.8958).Target zones: 1.9960-2.0233.
GBPNZD Cup & Handle Pattern
$GBPAUD (D) ABC Bullish Pattern Long Entry above 1.62651, Stop below 1.61605(-0.01046), Target1 Zone: 1.7240 to 1.7534, Target2 Zone: 1.8380 to 1.8991
GBPAUD ABC Bullish pattern
$EURAUD (D) ABC Bullish Pattern Long Entry above 1.46382, Stop below 1.44199(-0.02183), Target1 Zone: 1.5409 to 1.5678, Target2 Zone: 1.6453 to 1.7013
EURAUD ABC Bullish Pattern
$EURCAD (D) ABC Bullish Pattern Long Entry above 1.45884, Stop below 1.44412(-0.01472), Target1 Zone: 1.5352 to 1.5600, Target2 Zone: 1.6314 to 1.6830
EURCAD ABC Bullish Pattern
$EURJPY (D) ABC Bullish Pattern Long Entry above 116.026, Stop below 114.843(-1.183), Target1 Zone: 123.85 to 126.30, Target2 Zone: 133.35 to 138.45
EURJPY ABC Bullish Pattern
GBPJPY is trading in Bull Flag pattern.
GBPJPY Bull Flag Pattern
GBPJPY is trading in Rectangle Channel pattern.
GBPJPY Channel Pattern
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KeySupport/Resistance,
Pivots
@ES Fib. Zone Pivots
ES Fib. Zone Pivots
NQ Fib. Zone Pivots
NQ Fib. Zone Pivots
QM Fib. Zone Pivots
QM Fib. Zone Pivots
@GC Fib. Zone Pivots
@GC Fib. Zone Pivots
YM Fib. Zone Pivots
YM Fib. Zone Pivots
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GAP ChartsShows filled and unfilled gap levels
@ES Gap chart with filled and unfilled Gaps with at least 1 ATR Gap.
@ES Gap Chart
@NQ Gap chart with filled and unfilled Gaps with at least 1 ATR Gap.
@NQ Gap Chart
@YM Gap chart with filled and unfilled Gaps with at least 1 ATR Gap.
@YM Gap Chart
EarningsCompanies releasing earnings in the next few weeks.
Octo
ber E
arnin
gs C
alend
ar
Nove
mber
Ear
nings
Cale
ndar
$DVN (W) ABC Bullish Pattern Long Entry above 32.77, Stop below 28.78 (-3.99),Target1 Zone: 48.9 to 54.4, Target2 Zone: 70.2 to 81.6
DVN ABC Bullish Pattern
$IDXX (D) ABC Bullish Pattern Long Entry above 157.16, Stop below 153.08 (-4.08), Target1 Zone: 161.6 to 163.9, Target2 Zone: 170.5 to 175.3
IDXX ABC Bullish Pattern
INCY (W) is trading in Parabolic Arc pattern.
INCY Parabolic Arc Pattern
CTRP (Earnings 11/1/17) is forming a Bullish AB=CD Pattern. AB=CD patternscompletes at 100% of AB range (from C). About 30% patterns retrace complete in127-162% AB range.
CTRP AB=CD Pattern
GRMN (Earnings 11/1/17) is trading in Symmetric triangle pattern. Triangle upsidebreakout level: $52.14, First target zone: $56.62-$57.83, $59, $61-64
GRMN Symmetric Triangle Pattern
$GRMN (D) ABC Bullish Pattern Long Entry above 51.10, Stop below 49.79 (-1.31),Target1 Zone: 53.2 to 54.1, Target2 Zone: 56.8 to 58.8
GRMN ABC Bullish Pattern
OLED Earnings 11/2/17 is trading in ABC Bearish pattern. Short entry is below 134.Stop above 139. Targets $121-125, 117.
OLED ABC Bearish Pattern
PFE Earnings 11/2/17 is trading in Symmetric Triangle pattern. Triangle breakoutlevel: $33.70. First target range $37 to $38.5
PFE Symmetric Triangle Pattern
SBUX (Earnings 11/2/17) is trading in 2BTop and Bear Flag patterns. 2B Top Shortentry is below $61. Stop 65.65. Targets near recent pivot low $50.84. SBUX is alsoforming a bear flag pattern.
SBUX 2B Top Pattern
TSLA Earnings 11/1/17. TSLA is trading in 2B Top pattern. Short entry is below$371. Targets are recent pivot lows $305-311.
TSLA 2B Top Pattern
$ULTI (D, Earnings: 11/1/17) Inv. HS Pattern (F). Long entry above 199.39, Stopbelow 194.81 (4.58), Target1 Zone: 210.4 to 213.4, Target2 Zone: 222.0 to 228.2
ULTI Inv. HS Pattern
$YELP (W, Earnings: 11/1/17) ABC Bullish Pattern Long Entry above 30.93, Stopbelow 26.92 (-4.01), Target1 Zone: 44.8 to 49.6, Target2 Zone: 63.6 to 73.7
YELP ABC Bullish Pattern
Weekly Relative Performances
Sector & Indexes Relative PerformancesWinners: SemiConductors, Technology, Banking
Losers: Airlines, HealthCare, GoldSilver,
Dow 30 Weekly Relative Performance
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Watch ListsMomentum
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Key Retracements
Relative Strength Ranks (200)
RS Ranks Sorted (Alpha)
Bullish/Bearish List
52 Week Highs and Lows
D%, W%, M%, YTD%
Algorithmic TradingAlgo. Techniques
Algo. Reports
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ALL RETURNS POSTED ON THIS PUBLICATION ARE HYPOTHETICAL PERFORMANCE GENERATED BYCOMPUTERIZED SYSTEM AND THEY ARE NOT ACTUAL TRADE REPORTS. HYPOTHETICAL PERFORMANCERESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATIONIS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSESHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCERESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONEOF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPAREDWITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIALRISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIALRISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULARTRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELYAFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS INGENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLYACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CANADVERSELY AFFECT ACTUAL TRADING RESULTS.
Trading Dragon Patternsby Suri DuddellaThe Technical Analysis arena provides plenty oftrading opportunities for traders in the form ofpatterns, cycles, and indicators. Successful patternrecognition and execution must consist of a strongframework and a well designed and tested rulebased trading methodology. In this article, I wouldlike to describe one of my favorite chart patternscalled ‘Dragon’ with a pattern recognitionframework and its trading rules.
One of the most powerful and basic pattern inTechnical Analysis is ‘Double Top’ or ‘DoubleBottom.' Most traders are familiar with the conceptsof ‘Double Tops’ and ‘Double Bottoms’ or ‘M-Tops’ and ‘W-Bottoms.’ However, all of thesepatterns have slight variations in its formations,rules and trading characteristics.
Markets rarely transition from bearish mode tobullish mode without going through a series ofprice action sequences to test support and resistanceareas. Major market bottoms or market tops involvea series of turning points (Swing Highs in M-Topsor Swing Lows in W-Bottoms) followed by somecongestion before picking a trend or counter-trenddirection from prior moves. The Dragon patternhighlights these turning points (Swing Lows andSwing Highs) and provides a rule-basedmethodology for trading them. Dragon patterns arevisible in all-time frames and all marketinstruments.
Dragon Framework
The Dragon (Bullish) pattern is similar to the ‘W’pattern or the ‘Double Bottom’ pattern. InverseDragon patterns (Bearish) are similar to ‘M’pattern. Bullish Dragon patterns usually form atmarket bottoms, and Bearish Dragon patterns form
at the market tops. Dragon patterns work in all timeframes and all market instruments. Here I willdescribe how a 'Bullish Dragon' is developed andtraded. The rules for 'Bearish Dragon' are similarbut in reverse direction.
Like most ‘Double Bottom’ patterns, Dragonpatterns present excellent trading opportunities withgreat risk to reward ratios. The Dragon patternstarts with a ‘Head’ formation as price declinesfrom the swing high level to a swing low to formthe first leg of the Dragon. A quick reversal fromthis swing low (1st leg) on an attempted rally to38-50% of prior swing forms a key swing high or'hump' level. Another retracement from hump levelforms second swing low (2nd leg). The completionof second swing low signals a potential dragonformation. These two swing lows (legs) usuallyform within 10-15% of the price difference. Theprice-action from second swing low should showkey reversal bars or a divergence in any momentumbased indicators. A spike in volume usually followsin the second leg. Trades are entered aftercompletion of 2nd swing low (2nd leg) and targetsare placed in the tail section of the Dragon pattern.
How to Trade a BullishDragon PatternTrade Entry
A trend line is drawn connecting the head of theDragon to the middle swing high at hump level.After 2nd leg completion, when price closes abovethis trend line strong reversal price action ordivergence in any momentum based oscillatorindicators (like RSI), first trade entry (long) isentered. A more conservative trade long entry(second trade) is entered when price closes above thehump level.
Stop: A Stop is placed below the lowest low of twoswing lows (legs).
Targets:
The first target range for a Bullish Dragon trade isset at 62-78% of swing range of head to 1st leg fromthe second leg level. A second target is set 100% ofswing range and the third target range is set at 127-162% of the swing of the head to the 1st leg from thesecond leg. It may be best to trade these patternswith Trail Stops once price starts to rise towardstarget ranges.
Example
The following example shows Bullish Dragonformation in Monsanto (Weekly) MON chart fromJuly 2015 to 2016. Here are some of the key pointsand how it is traded.
MON formed Dragon formation from October 2014to May 2016.
MON formed a swing high to form the head ofDragon pattern (Feb. 2015)
In October 2015, MON made swing low to formLeg1 level at 84.27.
MON retraced about 43% into the prior swing toform Hump level at 100.62.
A second swing low (leg 2) was formed in March2016.
A Trendline is drawn connecting Head and SwingHigh at Hump level.
Price closed above trendline to signal first long entryat 91.30 (April 2016).
A Stop was placed below the lowest low of legs.
First target is set at 62-79% ($111-119) of head toleg1.
Second Long entry was triggered above Hump level($100.62).
The second target level is at $128.5 (100%) of headto leg1.
The third target level is at $140-156 (127-162%) ofhead to leg1.
Current Examples Current Examples
Plato Algo. Performance Report (10/30/17)Short/Medium Term, Not for Sale or Lease.
Monty Algo. Performance (10/30/2017)Long Term, NOT for Lease or Sale
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