A comprehensive rollback is another secret of technical analysis. Anton Hanzenko. - Ester Holdings

A comprehensive rollback is another secret of technical analysis. Anton Hanzenko.

While studying various methods of technical analysis for trading in financial markets, everybody faced with an immense variety of various patterns, formations and other candle formations that should indicate further market movement. One of the most common and existing candlestick patterns for making money on financial markets is the Comprehensive Rollback or 3-Wave Rollback. 3-wave rollback refers to candlestick formations, but it’s hard to call it a pattern.

Comprehensive Rollback or 3-wave rollback refers more to wave formations that form whole blocks of waves and are described detailed in Waves Theory. But it is not necessary to go very far in the Waves Theory for its use.

Comprehensive Rollback or 3-wave rollback is a formation of the continuation of the trend and is presented in the form of 3 waves. It is equally effective on financial instruments and can be used on any timeframes.

It has to be several conditions for the formation of this pattern:

  • Before the formation of the Comprehensive Rollback pattern a clear trend is traced in the market.
  • The proportions shown in the figure must be met or be close to them. The end of wave 2 is not higher than the beginning of wave 1 (for the ascending pattern). Wave 3 breaks the low of wave 1, the main condition for working the pattern.
  • The resumption of the original trend.

These conditions are given for the uptrend, for the downward trend conditions are mirrored. Of course, in life, the Comprehensive Rollback often has an elongations at wave 2, which can form a long flat and spoil the pattern, but if the conditions of the low and high are preserved, the pattern also can work. Also, do not be frightened when the flat and formed on the 1 and 3 wave, the main thing that the structure is preserved.

In the above example, during the formation of wave 3, a short flat can be traced, but with time it fulfills the main condition of the Comprehensive Rollback and wave 3 updates the low of wave 1.

The entry point for the Comprehensive Rollback pattern is the price breakthrough of the low of wave 1 (the red horizontal line) in the direction of the initial trend. Stop is set at the low of wave 3 or depending on the market volatility, when the breaking of the low of wave 1 is slightly expressed. It happens that wave 3 updates the low of wave 1 with just a few points, and the pattern working out starts, in which case it is worth to use the second option of placing stop orders.

There are no clear indications of goals while using this pattern, but often the minimum goal is not less than wave 2.

When using the Comprehensive Rollback pattern or the 3-wave rollback, it is worth remembering the basic conditions for the pattern working and you should be ready for various formations. You can learn more about this pattern and not only during the training courses from Еster Holdings Inc.

Anton Hanzenko

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