Video review of "Pattern Smasher – A New Technique for Isolating Predictive Patterns in the Markets"

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The most consistently predictive patterns in the markets are of a newly discovered class called Dynamic Patterns. In this workshop, Ed explains what Dynamic Patterns are and how they can be employed in trading using a technique called pattern smashing. Pattern smashing enables you to identify patterns that have high probabilities of specific outcomes.

There are two classes of predictive patterns in the markets, static and dynamic. Static patterns are the focus of most of today’s market analysis technologies. The characteristics of these patterns can be defined by a property template that never changes over time. An example of this is the Candlestick methodology. Much of Ed’s early research dealt with proportional relationships such as Fibonacci. He now considers these relationships a subset of a larger and more powerful class of dynamic patterns. Dynamic patterns are unique in that they can be identified by both a set of pattern signature properties that do not change over time and a set of dimensional properties that are in constant change over time.

The stable properties give these patterns their predictive power, but they are often masked by the highly visible changing properties. A dynamic property can be identified by “fuzzy” characteristics akin to the properties that allow us to recognize different human facial expressions or different trees within the same species. One specific dynamic pattern can thus be big or small, elongated or shortened, etc. and yet still be identifiable as the same dynamic pattern.

The pattern-smashing concept enables you to identify dynamic patterns and then use the less obvious and stable properties to predict future price action.

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