Pesavento Patterns and New Support Database

May 18 , 2005

16:51 @Ensign_Kimball: Today, we are going to discuss the Pesavento Patterns tool.

16:51 @Ensign_Kimball: I will go over the basics of the tool. I will show you some examples and how to use it. Please hold your questions until the end. I will start by opening an IBM Daily chart

16:51 @Ensign_Kimball: My chart is blank. You can see that the price for IBM has dropped quite a bit since the first of the year. There are several tools that you can use to Pick possible turning points for a chart

16:51 @Ensign_Kimball: The Pesavento Patterns tool is one of my favorites

16:51 @Ensign_Kimball: To Apply the study to a chart, simply Click the Studies button and then select 'Pesavento Patterns' from the studies list

16:51 @Ensign_Kimball: At first glance, the chart looks kind of messy... I would agree. However, there are a lot of bars on the chart, and a lot of Swings that the tool has marked. You can remove some of the clutter by doing the following...

16:51 @Ensign_Kimball: Open the Properties window for the Pesavento Patterns study. I have posted the window above. I have changed the 'Min. Bars' setting in the top left corner to a value of 12. Previously, it was set at 3 bars. This settings specifies how many BARS to allow in a recognized SWING. A setting of 3 BARS caused many many Swings to plot on the chart. A setting of 12 BARS eliminates all the little swings, and only allows swings with at least 12 BARS in the SWING.

16:51 @Ensign_Kimball: The 'Min. Size' setting in the top Left corner of the Properties window is used to specify a SIZE limit for the Swings. I am not currently using the setting. However, we could filter out swings that were not at least a specified PRICE amount.

16:51 @Ensign_Kimball: I just posted a screen capture of the Properties window, with the 'Min Size' changed to $1.00. This would require at least a $1.00 move before a Swing would be recognized.

16:51 @Ensign_Kimball: The post of the daily IBM chart above is filtering the chart with a 12 BAR min , and a $1.00 Price minimum. Notice that the HIGH at the first of the year does not have a swing correction during November and December. I will now change the 'Min Size' setting back to ZERO and repost the Chart.

16:51 @Ensign_Kimball: The study now recognizes a small correction near the top of the range. The Chart started an Up Trend in mid August, which finished at the turn of the year. You could count Elliott waves in the up trend 1,2,3,4,5. The Pesavento Patterns study is very helpful in showing you where the SWINGS and FIB levels are lining up

16:51 @Ensign_Kimball: The 'Min Size' and 'Min Bars' settings allow you to filter out smaller SWINGS (or waves). Notice the RED line at the bottom of the chart. The market Corrected down to a FIB number of 1.618

16:51 @Ensign_Kimball: You could have seen this same price level by using the FIB RETRACE tool Shown Above. It marks both PRICE and TIME. The market corrected almost perfectly from the line at the 1.618 level.

16:52 @Ensign_Kimball: The market has been bouncing up and down for the past month. The Blow Up of the past month in IBM is marked with the Pesavento Patterns study. Currently the market has retraced it's latest correction up to a .786 level

16:54 @Ensign_Kimball: One of the nice features of the Pesavento Patterns study is that it updates in Real Time as the markets develop

16:55 @Ensign_Kimball: It's like having a FIB tool and a SWING marker in real time

16:55 @Ensign_Kimball: The very last SWING on the chart is not set in Concrete. It can change and continue to update, based on what the market does. Example, if the market does not bounce off the 76.82 level ( .786 correction). And if it continues to trade higher, Then, the study will extend the last Green line and continue to Label it for you. Most likely, the markets would first trade up to the 77.90 level again

16:58 @Ensign_Kimball: Use the 'Formations' tool to plot a potential SWING count based on what has developed so far. The chart post above shows a potential 1.2.3.4.5 count.

17:00 @Ensign_Kimball: The Chart post above, shows an A.B.C type of correction, which is also possible

17:01 @Ensign_Kimball: This past weekend, I spent a few days watching Larry Pesavento trade the markets in Arizona. He has a very successful trading style. He uses the Pesavento Patterns Tool. He uses the Pesavento Map study. He uses the 'Formations' tools and most of the FIB measurement tools. He would mark up a chart with several FIB lines and Formations and see where the Price levels would be. The Pesavento Patterns study was then used during the day to help him keep trace of where the current SWING was heading. Of course, not all SWINGS go where you HOPE or THINK that they will go. You have to adapt to the Markets as they change.

17:06 @Ensign_Kimball: But, at least the Pesavento Patterns study will keep updating during the day and letting you know where the current Swing is, in relation to all the past Swings. If you are a FAN of Fibonacci numbers and corrections, then the Pesavento Patterns study should be used.

17:06 @Ensign_Kimball: Now....Lets look at the Properties window for a minute.

17:07 @Ensign_Kimball: The Parameters, Colors, Line Styles, and Markers can all be customized to your own liking. For Example, I have changed the COLOR of the UP and DOWN trend lines to be GREEN and RED. You can change the line Style to be THICKER if you like. Here is an example.

17:09 @Ensign_Kimball: In the posted screen above, I have added a $ Marker To the UP and DOWN Swing levels. This causes the exact Price of the chart to be printed next to each Swing. Example:

17:12 @Ensign_Kimball: You can also use the Properties window to specify which FIB levels will be plotted on the chart. You can change the LINE thickness and color of any of the lines. In summary, the Pesavento Patterns study is used for helping to identify FIB levels and Elliott wave patterns. If necessary, you can filter out SWINGS by both BAR and SIZE minimums. The tool is very customizable

17:15 @Ensign_Kimball: I am done with the Training portion of the Class.

17:15 JohnA_83402: tell us about your Phoenix trip

17:15 @Ensign_Kimball: If you have a question about the Pesavento Patterns study, let me know.

17:16 sctrader: Can this tool be used on other platforms

17:16 @Ensign_Kimball: First...Phoenix - Larry spent 2 days training, then 2 days trading. You could trade along with him if you wanted to. He would generate his targets and key price levels before the markets opened. He would already be looking for the markets to test certain FIB levels

17:17 Shar: On the daily?

17:18 @Ensign_Kimball: He would use lots of time frames. I have just used the IBM daily chart as an example for today. In general, the Daily charts and longer time frames were used to validate the Major direction of the market. Trading in the direction of the Major trend was important. But, there were trades made to play small corrections of the Major trend

17:15 flor: what are the settings of "formations" ?

17:20 @Ensign_Kimball: Next....The Formations settings are shown above. You can UNCHECK boxes on the Left to draw only a 3 wave, instead of 5 wave. Change the C-D setting to be 100 instead of 161.8. If you want the A.B.C to have equal length Swing Predictions

17:22 @Ensign_Kimball: The example above would plot an ABC will equal swings

17:27 @TAGR - Maceo: @Ensign_Kimball, I've not really seen the Patterns in live trading so I'm struggling to see the use for them... Are they used to confirm a retracement has honored a FIB ratio?

17:28 @Ensign_HA: yes, that is the idea

17:28 Rice: Excellent idea. Howard, if I may suggest, a link to this URL somewhere in the Help pulldown and on the Ensign website would also be helpful.

17:29 @Ensign_HA: yes, rice, it will be there in next Ensign upgrade - try clicking on one of the e-mail links in the database to read the question and answer. I see Mike is here, thank you Mike for this database

17:30 @Ensign_Mike: As Howard makes improvements and fixes in the program, we found it increasingly difficult to stay "up" on it all. It is a daunting task. We found we questioned Howard more and more and his burden of support was raising as well. We started printing the emails Howard would send to us and keep them in a binder.

17:31 @Ensign_Mike: Four inches of paper later, we found it difficult to search for answers, and very time consuming. We came up with a way to copy and paste email text into a database and search it. Howard then asked if he could post pictures... as pictures are worth a thousand words. So this database began and became a very worthwhile effort. Now we have a static, easily managed database that can be searched, viewed, linked-to, etc. There are no files to update or upload.

17:33 art 45: good idea, saves us time and saves you from answering the same question 500 times

17:36 @Ensign_Mike: Thanks, JohanA_83402

17:41 JohnA_83402: Mike - opened 10 in a row including with pictures - all okay

17:42 @Ensign_HA: thx for feedback john, we need to figure out the configuration differences in viewers that cause some to not show the information as it does for others.