Three Valleys and A River

The "Three Valleys and A River" pattern is similar to the "Three Hills and A Mountain" pattern but in a reverse sense, and it is also similar to the "3-Drives (bullish)" pattern. The "Three Valleys and a River" pattern is very rare, but it is also very reliable pattern. It does have 3 distinct valleys as prices making three thrusts to go up and succeed in the third attempt. Usually this pattern occurs near the market bottoms. The "Three Valleys and a River" pattern further supports Fibonacci ratios among the three drives. Each valley retraces to a minimum 0.5 to 0.618 Fibonacci ratio of its height before expanding into the next valley. After completion of three valleys, a trend line is drawn connecting the top of the three valleys. Prices closing above the trend line signal a "long" trade. After completion of 62% of the previous range, it has another significant reversal to the downside (River).

Trade: The "Three Valleys and a River" pattern presents two trade setups. First trade: A close above the trend line signals a reversal. Enter a "long" trade one-tick above the high of the breakout bar. Second Trade: After completion of 62% of the AB range, enter a "short" trade at point "C."

Target: Target setups for the above two trades. The first trade setup is "long" from the three valleys. For this trade setup, set a target at 62% to 78% of the AB range. The second trade results in 100% of the AB range retracement from point "C."

Stop: For the first trade, if prices close below the trend line, close the trade. For the second trade, if prices close above level "C", close the trade.

3-Valevs and A River
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