Three Hills and A Mountain

The "Three Hills and A Mountain" is rare, but a very reliable pattern. This pattern is similar to the "3-Drives (Bearish)" pattern. However, the "Three Hills" pattern is not of equal magnitude hills, and consists of another reversal trade in the original trend direction. The pattern also has a close relation to Elliott wave theory. The pattern supports Fibonacci retracement and extension concepts for key support and resistance areas. This pattern has two trade setups; one "short" and one "long."

Each hill retraces to a minimum of 0.5 to 0.618 (Fibonacci ratio) of its height before expanding into the next hill. After completion of the "Three Hills," a trend line is drawn in the chart below connecting the bottoms of the "Three Hills." A close below the trend line gives a short-trading opportunity. After completion of 62% of the prior range, it has another important reversal to the upside, the "Mountain" which rallies about 100% to 127% of entire hills range (AB).

Trade: The first trade occurs on the close below the trend line. The second trade occurs after completion of a 62% retracement to the downside-"AB." The second trade is a "long" trade from "C."

Target: The first trade target (Short) is 62% of prior swing length-"AB." The second trade target is from the "C" level, which is 100% to 127% of "AB" to the upside.

Stop: Place the "first trade" stop above the "B" level and the "second trade" stop below the "C" level.

Fantastic Futures

Fantastic Futures

Get All The Support And Guidance You Need To Be A Success At Futures Trading!This Book Is One Of The Most Valuable Resources In The World When It Comes To Futures Trading For The Common Guy.

Get My Free Ebook


Post a comment