Candlesticks, Fibonacci, and Chart Pattern Trading Tools : a synergistic Strategy to Enhance Profits and Reduce Risk

SOME FINAL REMARKS
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chart patterns. Applications of these trading strategies were then the
subject of Chapter 4.
We started with Fibonacci price corrections and price exten-
sions, and showed that they can be prof itable trading tools if traders
follow the parameters that make these strategies work.
Next, we analyzed candlestick chart patterns. Candlesticks en-
able traders to look at price moves differently, compared with looking
at regular price bar charts. Candlestick charts show the momentum of
each day’s price moves. They are def initive and can be very helpful to
the short-term trader. But the usefulness of candlesticks as a stand-
alone trading tool has to be judged carefully. Test results from Rogal-
ski Trading, Germany, which used the most common candlestick
patterns on the Dax 30 Futures Index and the Euro-Bund Future over
a longer period, were somewhat negative.
Finally, we tested 3-point chart patterns. These are some of the
most important investment tools available. They express investor be-
havior and are among the very few consistent elements in the analy-
sis of structures in price data. We are thankful to Mr. Thomas N.
Bulkowski, who has put considerable effort into sorting chart patterns
according to statistical criteria. These statistics indicate that some of
the chart patterns we favor do very well and prove reliable in practi-
cal trading. The greatest advantage of working with chart patterns is
that skilled traders can execute them without sophisticated comput-
ers. The 3-point chart patterns may look old-fashioned; however, they
are powerful trading tools.
PHI-ellipses as trading tools were introduced in Chapter 5. PHI-
ellipses are special because they make chart patterns visible. When
working with PHI-ellipses, investors know always what to look for in
the markets no matter how confusing the weekly, daily, or intraday
charts might appear. With PHI-ellipses, traders can master trend pat-
terns and sideward patterns. PHI-ellipses consist of three trading di-
mensions: price, time, and angle, which are seldom found in a single
trading tool. When a solid analysis of all three dimensions precalcu-
lates the same turning point in a market, we can invest with conf i-
dence. PHI-ellipses are reliable long-term and short-term, and also on
intraday data.
We concluded our analysis in Chapter 6 by presenting core com-
binations of Fibonacci trading tools with candlesticks and regular 3-
point chart patterns.
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