Three Peaks Valleys at the Upper Lower Borders of PHIEllipses

Most trading signals generated with PHI-ellipses on intraday data occur when three peaks or valleys are formed at the upper or lower border of the PHI-ellipse.

When three peaks have been established at the upper border of a PHI-ellipse and the parallel to the median line is broken to the downside, we immediately get a sell signal. The opposite strategy holds true for buy signals based on three valleys at the lower border of a PHI-ellipse.

Figure 5.43 shows four examples of short trades with three peaks established at the upper borders of the underlying PHI-ellipses.

Figure 5.43 Short entries on three peaks at the upper borders of PHI-ellipses.

Once a trading signal is executed, we place a stop-loss and a profit target according to the rules previously described. Trades are closed out by the end of the day.

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