"Elementary Particles" price charts

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Thomas DeMark in his book "Technical Analysis - a new science" has offered to structure the price charts to use reference points, which he called his name. Pivot points are a mark of coastlines in the endless stream of prices. However, for the construction of the point of the first level requires three candles, while for the second level - now five. These techniques show great structure of price movement, but more often in retrospect. To get on the schedule a new "elementary particles", to wait for a long time - from three to five periods. While waiting five candles prices can go very far. Try to make the "elementary particles" of only two candles. If you look closely at the chart, you will notice that the two candles only give four possible combinations. It's Rally, Reaction, Inside and Outside.

Thus, a total of four formations, only four "elementary particles", which consist of only two candles.

Imagine a precise definition of each formation.

Х Rally (growing), today's high is higher than yesterday's and today's low is not lower than the previous;
Х Reaction (incident) below today's low of yesterday, and the current maximum is higher than the previous;
Х Inside (private or internal), today's high is lower than yesterday's and today's low above the previous one;
Х Outside (open or external) is today's high is higher than yesterday's, and the current is below the previous minimum.

The momentum of price movements

As a general rule, unless you use option schemes, the opportunity for profit exists only if the unidirectional change of prices. Analyze daily price chart using the four proposed formations, with particular attention to an intraday high (High) and low (Low). If you count them, respectively, the level of resistance and support level for the price movement during the day, information on the opening price (Open) and the closing price (Close) is insignificant.

High and Low levels are formed by traders - traders. During the day, the price could not fall below the Low (where it received support from the Bulls) and rise above the value of High (where she resisted bears). The prices of the Open and Close form market makers in the trading system NASDAQ, based on prices in ECN, - first of all, and orders of their clients. And in exchange, having before bidding information on all applications received, stock experts place the application so that when you open a trade to get the equilibrium price of the stock. Since the transactions are made, not only during the exchange session, Open and Close prices are formed, rather, not by traders, and exchange gong. It's just a mark on the chart at a specific time. And for the markets, working around the clock, for example, FOREX, opening and closing prices do not play any role.

Looking at the price chart with the proposed point of view, it is easy to see that only two formations - Rally and Reaction - point to one-way movement of prices. The other two - Inside and Outside - is a pause in the current tendency. With the increasing formation Rally current candle is above the previous one, ie High above the new price of the last peak, and the new price Low - above last minimum. Obvious upward trend. The reverse is true for the incident formation Reaction, pointing to a downtrend. In the case of an internal combination Inside - prices have remained the same - only reduced the scope of their intraday swings. This is a sideways trend.