Dragon Pattern

The "Dragon" pattern is similar to the "W" pattern or the "Double Bottom" pattern with few different trading rules and different targets. "Inverse Dragon" patterns are similar to "M" pattern. "Dragon" patterns usually form at market bottoms. Dragon patterns work in all timeframes and in all market instruments. Like most "Double bottom" patterns, "Dragon" patterns present excellent trading opportunities with low risk to reward ratios.

The "Drgaon" patterns start with a "Head" formation and price declines from the head level form two legs of the "Dragon". These two legs in a "Dragon" pattern usually form within 5% to 10% of the price difference. The second leg has a strong indication of reversal as it posts a key reversal bar, or a "divergence" in any oscillator indicators. The price rise in the second leg is usually followed by a spike in the volume. A trend line is drawn connecting the head of the "Dragon" to the hump. When the price closes above the trend line and confirmed by price action or divergence in any oscillator, it signals a reversal. The second confirmation of "Dragon" occurs when the price closes above the hump, 38% to 50% of the range from head to the low of the first leg.

Trade: Aggressive traders enter a "long" trade when the price closes above the trend line. A better trade entry may be signaled when the price closes above the hump level. Enter a "long" trade few ticks above the hump level.

Target: Targets are usually at 127% of the second leg range and another target is set at near the "head" level.

Stop: Place a "stop" order below the "lowest low" of the two legs.

@ER2 610Tick Bais L=B1940 Z60

Dragon Pattern

@ER2 610Tick Bais L=B1940 Z60

Dragon Pattern

So «II* TrMÎEStlIiCîi 11:M 12:15 12:» 13:11 13:42 14:14

Long

So «II* TrMÎEStlIiCîi 11:M 12:15 12:» 13:11 13:42 14:14

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