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(Milner R.) Time, Price and Pattern PDF
(Milner R.) Time, Price and Pattern PDF
T his article is taken from the notes of my trading log for a closed and open trade in the platinum
market. My trading plan is three-dimensional. I look for coincidences of time, price and pattern in market
activity to indicate trades that promise maximum profit potential with minimum exposure and risk. Only
when the market completes a reliable pattern, near a time period indicating a change in trend and at an
important price level, do I enter or exit a trade. All three dimensions must coincide.
The time ratio analysis of the recent major cycles in the gold market indicated that the period near
September 16-27, 1988 would likely result in an important change in trend.
Timing, as well as price activity, is often related to the important Fibonacci ratio of 61.8%. Most traders
are well aware that price often retraces 61.8% of the prior swing. This important Fibonacci ratio is also
very important in my timing analysis for the precious metals markets. A change in trend often results near
a61.8% time ratio of a prior cycle extended from the completion of that cycle. Let me illustrate and
explain why I was looking for an important change in trend near September 16-27.
September 27 was 49 calendar days or 7 weeks from the August 9 Wave 3 low, prior to the momentum
move down from August 25. Gann calls the 49th period of time the "death zone" and a period to look for
a change in trend. I also always look for indications of change in trend 49 calendar days from minor and
major swing highs and lows.
Whenever my timing analysis results in such a cluster of probable change-in-trend dates, I am very alert
to the price and pattern activity of the market as those dates approach. I became very alert for my
price-and-pattern analysis to indicate a change in trend beginning the week of September 12.
My Elliott Wave price pattern and ratio analysis indicated that beginning the week of September 12,
platinum was in the fifth or final wave from the June high. A significant and very reliable pattern was in
its final stages. I often play a bit fast and loose with Elliott Wave "rules." I find what is most important is
the general form, pattern and price ratio of an unfolding price. The count shown in Figure 1, admittedly,
is not a textbook Elliott Wave fit, but was good enough to indicate the pattern down was likely being
completed.
There was an important cluster of price levels that indicated the $472-$486 price zone was likely to result
in the termination of the decline. Price swings almost always result in an obvious relationship to prior
swings. The challenge is to determine which relationships will be important at any one time. The June 22
high at $642 to the June 29 low at $553 equaled $89. The June 20 high at $608 to the August 9 low at
$518 equaled $90. Both have significance89 is an important Fibonacci number and 90 is an important
Gann time-and-price number.
A price decline of $89-$90 from the August 25 high at $562 would fall at $473-$472. The decline from
the July 7 high at $594 to the August 9 low at $518 equaled $76. A $76 decline from the August 25 high
would fall at $486.
Price fell dramatically on September 19, leaving a gap. This price activity had all the characteristics of an
exhaustion gap which is very typical of platinum in its final stages of decline or advance. September 23
resulted in a wide range outside day with a close near the low of the day. This type of intraday market
activity usually would indicate that much lower prices were likely. However, price was completing a very
reliable Elliott Wave pattern and moving into a very important support zone exactly within a time zone
where there was a high probability of a significant change in trend time. Time, price and pattern were
coinciding, indicating an important change in trend was at hand.
Turning point
On September 26, the trading day following the outside down day of September 23, the market
experienced a reversal day. Price made a new intraday low with a close near the top of the day's trading
range, considerably above the prior day's close. This was decidedly not the type of price activity that
normally follows an outside down day. The intraday low of the reversal day fell at $481.50, just a few
dollars below an important support level (point J). The price activity of the Wave 5 pattern from the June
high was complete. The reversal day fell precisely within the September 16-28 turning point period.
My time, price and pattern analysis all indicated an important change of trend was at hand. This was
confirmed by the short-term reversal price activity. I went long at $489 on the close of the reversal day on
the strength of the coincidence of time, price and pattern. When the timing analysis is confirmed by the
price and pattern analysis, I have the confidence to enter the market at minimum risk and exposure. I
placed my stop at $479.50, just $2 below the low of the day of entry (point K). My exposure was $9.50
FIGURE 2
FIGURE 3
Stocks & Commodities V. 7:5 (143-146): Time, price and pattern by Robert Miner
New highs
On the night of November 3, the reversal day, I reviewed my time, price and pattern analysis for
indications of another swing to higher prices. The market was very strong and might be unfolding in an
Elliott five-wave impulse pattern. If so, new highs are to come if today's high was, indeed, the
termination of this swing. There is too much evidence that the platinum market is at or very near the
termination of the correction from the June-September bear cycle.
My Gann, Elliott and Fibonacci analysis worked in textbook fashion, and I sat with a very substantial
profit. I decide the weight of the evidence indicated an important top and that I would get out near the
open the next day.
I closed out my long position the next day, November 4, at $571 near the open. This left me with an $82
($4,100 per contract) profit and confirmation that my Gann, Elliott and Fibonacci time, price and pattern
analysis unfolded in a textbook manner for a substantial profit at minimum exposure and risk.
Once price closed below the 14 support angle followed by a close below the 12 support angle, I felt
vindicated by my decision to take profits and get out near the high. However, the market was determined,
as always, to deflate my enlarged ego a notch or two by immediately rallying back up above the 12
angle and rapidly exceeding the prior highs. The move to new highs confirmed that the platinum market
was going to unfold into an Elliott five-wave impulse pattern. I calculated the time-and-price objectives
that would indicate the completion of the Wave 5 pattern and a point to go short.
The next significant time objective fell on December 6. The June 2 high to September 26 low equaled
116 calendar days. 62% 116 = 72. September 26 plus 72 calendar days falls on December 7. I was
looking for indications of a change in trend within one week of December 7.
The price objective for the termination of the fifth wave fell in the $611-$625 zone. Various Fibonacci
relationships projected this range for the fifth wave. The first objective would be $611 if Wave 5 equals
50% of Wave 1. Next, would be $617 if Wave 5 equals Wave 1. If Wave 5 equals 62% of the beginning
of Wave 1 to the end of Wave 3, the objective would be $624. The final Fibonacci measurement is Wave
5 equals Wave 3 and that objective would be $625. One other consideration is the gap area ($612) that
occurred during the June island top.
This important price zone at $611-$625 was not far above the Gann 41 angle from the June high during
the week of December 5 another coincidence of price ratio objectives with an important Gann angle
(point R). I was looking very carefully for short-term reversal patterns to go short the week of December
5 if price was in this resistance zone. Would the market hand me another gift with a reversal day at this
important price level in this important time period?