Picking Up Patterns

No pattern is perfect. I'd say no technique in trading is perfect, either, but when a firm profits in 999 out of 1,000 trading days, I'd say that's as close as you can get in trading, but I digress. While no pattern is perfect, when a pattern starts to repeat, I will sit up and pay attention. Last week, I tossed up a Volatility Index (VIX) that had been predictive four times since September. Make that five in a row, and one certainly worth watching for in the future. Here is the chart after the latest VIX push.

Volatility Index (VIX) Source: StockCharts.com View Chart » View in New Window »

The upside exhaustion is a more difficult call. Because of this, I would prefer to use a few weekly charts when looking for long entries. The daily charts are going to be a tough go right now....242 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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