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“ THE PAST IS THE TEACHER OF THE FUTURE”
OLD HUNGARIAN PROVERB
com .3300 . A Head and Shoulders Formation should only be considered completed when the neckline is broken. which was quickly followed by abreak in prices.3000 Jan Feb Mar Apr May A NFL PFL B POSITIVE/NEGATIVE FORCE LINES Figure 1 Arrow (A) indicates that a Negative Force Line NFL has been broken to the upside. it must be joined by at least three points. This break (B) created the head of the HASB. Arrow (B) shows a Positive Force Line in place.3600 . “ THE PAST IS THE TEACHER OF THE FUTURE” OLD HUNGARIAN PROVERB HEAD AND SHOULDERS FORMATIONS One of the oldest and most reliable of all chart formations is the Head and Shoulders Formation. . A Negative Force Line (NFL) acts in just the opposite fashion to aPositive Force Line (PFL).3100 . HASTZ HASB neckline A HASB B Aug Sep C Oct . The right shoulder (C) comleted the formation. © 2003 MarketClub. The longer the Positive Force Line (PFL) is in place the larger the ensuing move will likely be in the opposite direction once the Positive Frce Line (PFL) is broken. Jul HEAD AND SHOULDERS FORMATION Figure 2 The left shoulder (A) gave the market a small rally. This formation takes place usually after a trend has been established and in place for some time. it is possible that prices can set and retest the neckline. Once the neckline is broken.3500 .10 KEY CHART FORMATIONS THAT WORK POSITIVE AND NEGATIVE FORCE LINES A Positive Force Line (PFL) means that rates are trending in a positive way and is put into place when a uptrend is underway.Both the Head and Shoulders Top (HAST) and the Head and Shoulders Base (HASB) have a high degree of accuracy and usually portend to a major change in direction for either a currency or a cross rate.3400 .3200 . In order for a Positive Force Line (PFL) to be valid.
The measurment used is to take the verticle side of the triangle and measure te distance.this acts as a confirmation(see Positive or Negative Force Pivot Points). One way to avoid this is to wait untill either a Positive or Negative Force Pivot Points is taken out. are among the most important chart formations of all. B DB Aug Sep Oct DOUBLE BOTTOM Figure 4 Point (A) creates the is the first drive down of this double bottom ( or potential Triple Bottom). usually indicating a substantial move in the opposite direction.com . when they occur. One of the strongest assertations about both Positive and NegativeForce Triangles is that they usually portend to significant moves.10 KEY CHART FORMATIONS THAT WORK POSITIVE AND NEGATIVE FORCE TRIAGLES Triangles can vary in both shape and size and are easily recognized in their various forms in foreign exchange charts. © 2003 MarketClub. At times it may appear as though a double top or bottom is forming only to see it fail and become part of another overall chart pattern. Both (A) and (B) are Negative Force contiuation type triangles. “ THE PAST IS THE TEACHER OF THE FUTURE” OLD HUNGARIAN PROVERB DOUBLE TOPS AND BOTTOMS A Double Tops (DT) and Bottoms (DB). Positive and Negative force triangles are extremely important. The market confirms the formation by moving over a NFL. Triangles can indicate both continuation patterns as well as reversal patterns. as they often act as a indicator of either new or renewed market action. B NFT NFT A Mar Apr May Jun Jul NEGATIVE FORCE TRIANGLES Figure 3 This will then give you a minimum objective from the breakout point.
Occasionally youu will get an extra gap thrown in. Measuring objectives can be particularly rewarding using either a flag or pennant formation.21600 A .22000 .10 KEY CHART FORMATIONS THAT WORK POSITIVE AND NEGATIVE FORCE FLAGS AND PENNANTS Positive and Negative Force Flags and Pennants are among the most reliable of indicators.com . .23200 . with its HASTZ having been achieved. The more tightly constructed a Flag or Pennant is the more dynamic and reliable the move. Jan Feb Mar DB B May Apr POSITIVE & NEGATIVE FORCE GAPS Figure 6 A dynamic series of Negative Force Gaps (A) was followed by a equally powerful series of (B) Positive Force Gaps. as they measure the pulse of the market and give you advanced warning of potential trend changes.22400 . Positive or Negative Force Gaps should be watched carefully. Gaps are generally very significant.23600 . and should not be ignored.22800 NFG Previous year's low PFG . Also shown a HAST. In the currency markets gaps occur usually in sets of three. HAST A HAST NECKLINE NFF HASTZ NFP B Mar Apr May Jun NEGATIVE FORCE FLAG & PENNANT Figure 5 A tight Negative Force Flag (A) is quickly followed by a Negative Force Pennant (B). © 2003 MarketClub. It is safe to say that both a flag andpennant formation are amongthe most reliableof all indicatorsespecially after a fast move in one direction. “ THE PAST IS THE TEACHER OF THE FUTURE” OLD HUNGARIAN PROVERB POSITIVE AND NEGATIVE FORCE GAPS A Positive or Negative Force Gap represents a blank space on the chart at which no trading took place. Often Positive and Negative Force Flags and Pennants form when a currency moves into new high or low ground.
3860 . Positive Support and Negative Resistance Lines are drawn horizontally.3980 . To achieve the PFTZ simply add the setback to the PFPP. A PFPP B PFTZ HASTZ One day reversal Jan Feb Mar Apr May POSITIVE FORCE PIVOT POINT Figure 8 Arrow (A) marks a Positive Force Pivot Point. . Pivot Points.3000 . they give very few false signals and have proven themselves over time. which are drawn on an angle and must be connected by three points to be valid. Another NRL (B) forms using three points. Arrow (B) indicates the Positive Force Target Zone PFTZ.3820 . the greater the significance of that area.2900 .3300 . The breaking of a pivot point signals very clearly that the market has failed andshould now move in the direction that the V is pointing (see Chart).com . move over to the right and measure from the pivot point to the highest/lowest point of the failed rally/or break. Then take that measurement and add or subtract it from the pivot point. © 2003 MarketClub. as they show exactly where the support or resistance is for a particular currency.3940 . These lines need a minimum of two points to justify being called Positive Support.3900 .4020 . Unlike Positive Force Lines. “ THE PAST IS THE TEACHER OF THE FUTURE” OLD HUNGARIAN PROVERB POSITIVE AND NEGATIVE FORCE PIVOT POINTS Positive and Negative Force Pivot Points have a history of successfully picking both tops and bottoms. A B NRL NRL NFPP Jan Feb Mar Apr May NEGATIVE RESISTANCE LINE Figure 7 A Negative Resistance Line (A) is broken on the upside. Locate the pivot point.10 KEY CHART FORMATIONS THAT WORK POSITIVE SUPPORT LINES AND NEGATIVE RESISTANCE LINES Both Positive Support and Negative Resistance Lines are important. . whether they be positive or negative should never be ignored. See how quickly the market moves after it breaks over a NRL. Measurement of pivot points are as follows.3200 . The more points and the greater the length of time involved.3100 .
004100 . Target zoes should always be shaded a little on the side of consevatism. the market makes an Island bottom IB and reverses course. “ THE PAST IS THE TEACHER OF THE FUTURE” OLD HUNGARIAN PROVERB POSITIVE AND NEGATIVE FORCE CHANNEL The formation of either a Positive or Negative Force Channel does not happen very often in the currency markets but when it does.004400 .003900 .004200 . look to take profits at 1.5000 (.004200 .004300 . is simply two parallel lines drawn at an angle that contain all market activity. it is a thing of beauty.004000 .6653) level.003900 Jan A NFC NFTZ Feb Mar Apr IB NEGATIVE FORCE CHANNEL Figure 10 Here we see a perfect Negative Force Channel (A). whether it be positive or negative. Never wait for the extra ticks.com © 2003 . A channel formation. Upon reaching a NFTZ. Let’s say we have a Negative Force Target Zone (NFTZ) of 1.003800 A PFPP NFTZ Jan Feb B PFTZ DB Mar Apr POSITIVE FORCE TARGET ZONE Figure 9 (A) indicates a NFTZ been achieved.10 KEY CHART FORMATIONS THAT WORK POSITIVE AND NEGATIVE FORCE TARGET ZONES Positive and Negative Force TargetZones are activated when they move out of a corresponding technical positive or negative formation. breaking over the NFC. MarketClub.6666) on Sterling.004000 .004100 . when the market flashes a negative or positive target zone (NFTZ) PFTZ). .004300 . take a conservative viewpoint and be willing to take profits several points or pips before a target is reached.5030 (. . A Positive Force Pivot Point (PFPP) indicates a Positive Force Taget Zone PFTZ see (B). Always look to take a profit before a big number.