Nearly every trader has heard of head-and-shoulders tops, triangles, and cups-with-handles. These are all chart patterns that have been known and discussed for years. You see big-wigs sitting there on TV talking about how the market should crash because of such-and-such a pattern on their charts, and every single introductory book on trading makes a mention of at least one pattern. With all this excitement about patterns, and the fact that every single trader has used them at least once, isn't it strange that no charting programs support them?

For some reason, the mainstream charting programs decided not to support visual patterns. TradeStation and MetaStock are perfect examples of this. If you want to plot out a moving average in them, it's a piece of cake. If you want to plot out head-and-shoulders tops, you're out of luck. 5-10 pages of computer code might get you started, but it's going to be ugly and it won't work very well in the end.

Wave59 is different...

Not only can Wave59 automatically find any kind of price pattern on a chart, it can also find more subtle time and space patterns just as easily. Best of all, designing custom patterns is a snap. Let's look at an example:

This graphic shows our Pattern Constructor at work. This is used to tell Wave59 what sort of patterns to look for. Setting up the zig-zag swing shown above was as simple as adding three swing legs to the chart and dragging the connecting points up and down until we had the right shape. It took about 3 seconds.

After we've got our basic shape, we can specify certain rules that the pattern must obey. These are shown in the lower half of the graphic. In this case, we want the price distance from A to B to be about equal with the price distance from C to D. We also want the time between A-B to be the same as the time between C-D. An easy to use wizard guides us through setting up these rules.

In case you were wondering, "space" is the distance between two points as the crow flies. On a price chart, it means you have to take both price and time into consideration, and must measure the distance in units of price/time. Price moves vertically, time moves horizontally, and space moves diagonally. The space measurement can be found using the Pythagorean Theorem. Remember that from math class? (a^2 + b^2 = c^2.) It's used to find the length of one side of a triangle when the other two sides are known.

WD Gann was the first to talk about space relationships. These relationships don't always pop out to the naked eye, but can be very powerful nonetheless. Of course, before Wave59 you would have had to sit there with a calculator in hand to work out the units before you even got to the pattern matching stage. I mentioned the Pythagorean Theorem earlier. Imagine doing that about a hundred times per chart. Wave59 can handle it, but no human would ever be able to keep up.

This means that until now, it's been practically impossible to study these relationships on an intraday chart. Not anymore..!

Once we've built our pattern, we can apply it to our charts and let Wave59 search for matches:

This pattern, as simple as it is, is cleaning up on this 1 minute chart of Microsoft. Each pattern match has been accompanied by a drop in prices. Some declines were small, such as the first pattern of the day, and some were huge, such as the 2nd and 3rd patterns. The reason why this pattern works is because it combines a known shape (the zigzag) with important time and price ratios.

This is the key to successful pattern matching. By combining price and time patterns together, you can often come up with things that will blow Stochastics and moving averages out of the water. Show me a mathematical indicator, and I'll show you a pattern that can do a better job. It can take some work to find accurate patterns, but once you find them they can be amazing.

By letting Wave59 automate the process, you'll be able to look for the good stuff. Fibonacci retracements, Elliot waves, and any of Gartley's patterns can be built and instantly evaluated by the software. You'll never have to miss another 1-2-3 pattern again! No pattern is too complex or difficult. If you can think it, Wave59 can find it.

Pattern matching has always been a powerful way of analyzing a chart. Some of the best traders in the world use nothing else. There is not another charting program that even comes close to Wave59's ability to scale charts properly, apply geometric shapes, and match time and price patterns. There are some killer trading patterns out there, but you're not going to find them by hand or by using clunky indicator-based charting programs like MetaStock. You need Wave59.

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