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Best Kept Secrets of Never Before Published Chart Patterns

Free Lesson

Author - Michael T.P. Wang at http://www.1stock.info - June, 2004

Introduction of Best Kept Secrets

Chart Pattern Secrets - Falling Flag

Chart Pattern Secrets - Rising Flag

The representation symbols below are used on chart pattern examples in all of my lessons.

I studied the estimated target price calculation of all the chart patterns by using the 1. to 1. ratio. This method is as simple as drawing a Measured Line of the initial price movement and then pasting a copy as a Target Line at the breakout of the channel. This method is visualized on the chart window so there is no need to use mathematical calculations to find the target price.

Chart Pattern Secrets - Falling Flag

Secret #1 - Falling Flag Pattern: Falling Flag is a chart pattern name I've created. The stock price falls first (Flagpole) and then forms a downward channel (Flag). This pattern can lead to a price break out in either an upward or downward direction. 

Note: Falling Flag patterns with up or down break out both have a high successful rate to reach target.

• To define a Falling Flag pattern, draw a green channel line based on two or more reversal points (V or Λ) on either side of the downward channel.
• Copy and paste the green channel line to define the parallel channel. It's o.k. if there aren't two or more reversal points touching the green channel line on the other side of the channel.

Measuring Target Distance:

• Draw the pink Measured Line 1. of the initial price movement (Flagpole) from the flat top of solid candlestick bar at a. to the flat bottom of solid candlestick bar at b. Ignore the thin tip line of the candlestick bars. I suggest using a shorter distance for conservative target price measurement.
• Note: b. and c. are reversal points that are located between the two channel lines and in some cases may also touch the channel lines.
• Copy the Measured Line and paste it as a Measured Target Line 1. from the bottom of the channel at where the stock breaks out B. to find target price g.
• Draw the horizontal blue Target Line at g. level.
• It is better to exit a few cents before the stock reaches the estimated target price.

Secret #2 - Fibonacci Retracement in Falling Flag Pattern

Trading Choice #1:

• E1. is the Suggested Smart Entry Point. It is $0.01 above the 38.2% Fibonacci Retracement (blue line) of the height of the downward channel.
• The height of the channel should be calculated from the moment when the stock first pulls back into the channel and not from the break out moment. Depending on the slope of the channel and the gap between the stock breaking out and pulling back into the channel, the price difference could be significant.
• After the stock price breaks out of the channel at B., wait for the stock to pull back to the ideal E1. Smart Entry Price to enter a long position.
• The stop loss price is $0.01 below the 50% of the Fibonacci Retracement (orange line)

Sample #1 - INTC

Close Up

Trading Choice #2:

E2. is the Secondary Entry Point as $0.01 above the e. reversal point.

• If a stock does not move to ideal E1. Smart Entry Price and is breaking out of the e. resistance level then enter a long position at E2. 
• The stop loss price is $0.01 below the 50% of the Fibonacci Retracement.

Sample #2 - QCOM

If you like this free lesson, please post your testimonials at the Chart Pattern Forum Testimonials Page.

Two more lessons are for sale: Best Kept Secrets of Powerful Reversal Patterns:

>> W-Bottom and M-Top Patterns Lesson

Secrets of Double Bottoms, Double Tops, One Step Up, One Step Down, Cup and Handle, and Inverted Cup and Handle patterns.

>> Head and Shoulder and Inverted Head and Shoulder Patterns Lesson

Revealing the Best Kept Secrets of powerful top and bottom reversal patterns that every trader must know.

To learn more Stock Chart Pattern secrets,  Order those Best Kept Secrets of Never Before Published Chart Patterns Now!

Suitable for Day Traders, Swing Traders, Penny Stock Traders, Short Term and Long Term Investors.

"Give you a fish and you will eat for a day. Teach you how to fish and you will eat for a lifetime."

Each lesson includes animated pattern explanation, detailed text explanation, and real stock examples, like the format shown in the above free lesson of Falling Flag and Rising Flag Patterns. Each lesson will reveal essential secrets that can help you to find a smart entry price, a precise stop loss price, and an accurate price target in the chart pattern. You will know when to enter and exit a position before it is too late.

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