From the very beginning, Wave59 was designed with the knowledge that there is an important relationship between the price and time axis. The two are not really separate, but are actually related in many interesting, subtle ways. This relationship can be used to gain a trading edge, and it was exploited by many of the most famous traders in the first half of this century, who built all their charts by hand.

With the advent of modern indicator-based technical analysis, pattern matching and the important relationship between price and time has been forgotten. In fact, all of the major charting programs have been built with the glaring weakness of being unable to properly scale charts so these patterns can be seen. This is not surprising given the fact that most of these programs have been designed by computer scientists, and not traders. The unfortunate effect is that it is impossible for users of these programs to study or apply any geometric patterns to their charts. If you use charting software other than Wave59, you need to realize that you are actively being deprived of a very effective and profitable means of chart analysis!

The first step to using geometric patterns in trading is to create a properly scaled chart. This means using X points per Y time periods, where X and Y are somehow related by an important harmonic number. Wave59 provides a number of ways to properly scale charts as shown in the graphic below.

In addition to automatic scaling (which is the only thing everyone else offers), Wave59 lets you specify proper scaling with two methods. Either manually setting the high or the low, or specifying the number of points per bar/hour/day in the chart. This will produce a properly scaled chart, with rallies and declines moving at a slope very near to 45 degrees.

Once a chart has been properly scaled, many patterns start to pop out at the trader. Ellipses, curved trend lines, and almost any pattern found in a book of sacred geometry can also be located in price action. Until now, traders using these patterns have been forced to draw them with magic markers on the computer screen, or on clear plastic overlays that had to be manually slid across the chart to do pattern matching.

Wave59 provides an easy, automatic way to build patterns which can be rotated, enlarged, and even automatically placed on a particular chart. Using the Pattern Builder, traders can create their patterns using a large number of drawing tools. All colors, proportions, and ratios will be reproduced faithfully by the software later on in real time conditions. Below is a screen shot of the pattern builder module in action:

This is not really a serious pattern, but is used instead to illustrate the capabilities of the software. Circles, ellipses, straight lines, text, and free hand pencil tools were all used to build this pattern. A floating protractor, color palette, and style palette all make building a pattern quick and easy. If we had desired, with a click of the mouse we could have loaded an actual market chart as our background as an aid to building the proper pattern. Bitmaps of patterns built in other programs can also be used, so if you wanted to, you could build your pattern in Adobe Illustrator or similar program, then import it into Wave59 for trading.

Once satisfied with our pattern, we simply save it and can call it from within any chart to help us in our analysis.

As you can see, the pattern is perfectly reproduced on the chart. With a simple click of the mouse you can drag the pattern anywhere on the chart, reduce or enlarge it to fit the price action, and even rotate it a complete 360 degrees around! No pattern is too complicated for this software. We've tested it out with messy signatures and scribbling, and ran into no difficulties. We're not suggesting that you will be able to find your signature hidden in price charts, but this software won't stop you from looking!

Building and testing patterns like this can be very rewarding, but traders 100 years ago had these capabilities if they were willing to devote the time to doing everything by hand. What Wave59 really brings to the table is automatic pattern matching, where you specify the pattern and data to use and the software decides how the pattern should best fit. In addition to fitting the pattern to the chart, Wave59 will display the best correlation it has found in its search, which you can use as a trading indicator!

Here's an example of the software fitting an arc to price:

The blue arc is our pattern, but it has been placed in that particular location by the software! The green line at the bottom is the correlation between the pattern and price. The software will take the given pattern, and examine a wide variety of different sizes to see which pattern fits the best. The arc displayed in this example is much larger than the one we built in the Pattern Builder, and is flipped upside down from the way we specified. If you were trading arc breakouts, there was no way you could have missed this one!

Until now there was no program that could enable traders to do this kind of analysis. In fact, only a few programs can even scale charts properly! Unless you have been working with Gann techniques, chances are you didn't realize the potential of geometric patterns. They are real, and are constantly appearing in the market. If you find a good one, it can give you a bigger trading edge than any RSI or moving average calculation, so this opportunity is a real gold mine for those traders willing to look at markets in a slightly different way. Don't let it pass you by!

Click here to open an account with us and begin using the power of patterns! Or click here to return home.