Segment Counting

Here's a technique that will help you throughout your trading career. It involves connecting corrections and double bars.

This technique is a bit more difficult to perceive, but over the years it has proved to be one of the best ways to spot a move before most people even suspect it is going to happen. As we view this technique, we want to realize a very important concept which is applicable not only to segment counting, but also to the simple count method, and the sagging highs/rising lows method:

WHEN ANY TWO OF THESE METHODS ARE OCCURRING SIMULTANEOUSLY, THE SIGNAL BECOMES CONSIDERABLY STRONGER THAN WHEN ANY ONE OF THEM OCCURS ALONE. WHEN ANY ONE OF THE METHODS IS COMBINED WITH OR CLOSELY PRECEDES A SIGNAL FROM THE LAW OF CHARTS (TLOC), WE HAVE A TREMENDOUSLY STRONG INDICATION THAT A SIZABLE MOVE IS JUST AHEAD.

Buy bar

Buy a breakout I of this high

Buy bar

Note: segments are those spaces between the low of the price bars. They are marked 1, 2, and 3.

ft i

Take a close look at how we've connected the lows on the chart: THE NUMBERED SEGMENTS ARE POSITIONED BETWEEN THE LOWS.

We've connected a low to a second low. We've connected the second low to a correction low, and the correction low to a double low.

We will buy a breakout of the high of the bar whose low made the third segment.

This technique will work in any market, in any time frame, so long as you are seeing something that has well formed patterns.

We'll temporarily interrupt our close examination of this chart in order to see what is meant by not well formed tradable patterns. All of the following charts have formations that are too FLAT, too BOXY, or too SKETCHY.

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