Markets demonstrate repetitive patterns where prices oscillate between one set of price ratios to another making price projections possible. Market trends can be defined by geometric relationships as they exhibit harmonic relationships between the price and time swings. Markets also form “cycles” around the price and time levels. Many investors/traders use “cycles” and “harmonic” relationships to project future swing prices and times.
“Symmetry” is visible in all markets and in all time-frames. “Symmetric” rallies and declines give traders an advantage to determine the key turning points. A cluster of similar extensions and similar retracements at key price ranges, or some important levels provide insights into future significant resistance and support levels. In addition to knowing key turning points, the benefits of trading symmetric “price/time” cluster levels include low-risk trades.
Gann, Fibonacci and Elliott all have studied market symmetry and found valid theories. These patterns exist in all forms in nature and certainly exist in the markets. One of the best ways to confirm “Symmetry” in the markets is to check “price” and “time” using two or more cluster confirmations. Another key method to compute these patterns is to use “percentage change of price” between market “highs” and market “lows.” “Symmetry” is a science by itself and traders take great advantage of knowing the potential turning points/levels using these methods.
Trading Symmetry Pattern
The chart above illustrates the “Symmetry” pattern from the Russell 2000 futures (EM) 610 tick chart. Symmetrical swing lengths are shown after a 50% retracement at BC swing. Market “symmetry” of 100% extension is expected after a retracement of less than 50% retracement levels. If the retracement exceeds 50%, the extension may be less than or equal to 100%.
- After ‘BC’ retracement, enter a “long” trade one-tick above the B.
- Place a “stop” order one-tick below the low of “C”.
- Target 100% of the AB range from level C to D.
- Another potential retracement is expected at D to 50% of the entire range of AD.
Trading Symmetry Patterns
The example above shows “Symmetry” and cluster of harmonic ratios from the Russell 2000 (ER2) 610 tick chart. After BC retracement of 88.6%, a Symmetrical extension at CD is formed near the “cluster” zone. This zone is where two or more harmonic levels are grouped at a single level. The “cluster” is formed at the retracement of 127% to 138% of AB and 127% of BC swings. The zone also acts as key support and resistance areas for trading. After another retracement of DE at 88.6% from the “cluster” zone, ER2 rallied to new intra-day highs.