Alpha Team

Price Patterns
Copyright 2005, Alpha Team
Dear Trader,

As you know, I tend to not take myself too seriously. I also like to
poke fun at the market.

Maxwell Fox, a member of the Alpha Team (my trading team) took it
upon himself to create a fun and easy way to identify common chart
patterns. I think you’ll find that some of them are very helpful, some
of them are completely useless, and all of them are entertaining.

I helped a bit on these patterns, as did Phil McGrew, Tony Wingfield,

and Ken Basquit, but all of the credit (and revenue) for these
patterns goes to Maxwell Fox, a great trader and friend.
Patterns at a Glance
 Pattern #1: The Hungry Hungry Hippo
This is simply a way of displaying a Bollinger Band breakout. Set
your Bollinger Band settings to 21,2 and wait for the bands to
contract to the point that they are only 25-40 pips apart on the 15
minute chart.

Then get ready to buy when the pair breaks out of that 40 pip range
on the upside, or to sell when the pair breaks out of that range on
the downside. Use pivot points, Fibonacci retracement lines, or
regular old support and resistance to help you get out of the trade.

This chart also has Parabolic SAR dots. These are the pellets – the
Hippo food. I think they’re useless. You don’t need them. Unless
you are hungry, of course.
The Hungry Hungry Hippo
Hippos just love those little
pellets. As you can see when
the Pellets drop outside of the Cover Here
Hippos Mouth, you have to Buy
to make sure your Hippo gets its
feed. Cover the Long when the
pellets flip up to the top of your
Hippos Mouth.

Entry Point

Buy Buy Buy!!! Your Hippo is Getting Hungry!

 Pattern #2: Holy Divergence!
Divergence is the real deal. I think you should spend time getting
familiar with how divergence works.

In the chart pattern that follows, you can see that Momentum was
falling even though the price was staying level. This is an early
warning sign that the pair is gearing up for a fall.

I mentioned to Max one day that the Momentum indicator was

shaped like a Batman head. And this is what he came up with.

You can use RSI, Stochastics, or MACD to plot divergence, as well

as Momentum. I never use Momentum. Max did for this chart
pattern because he knew that I would mock him.
Holy Bearish
Divergence Batman!

As you can see on this

pattern Robin comes
through again with the
sidekick sell signal.
When Robin’s head
posts lower while the
corresponding peak
on the candles is
higher, sell on the first
sign of reversal. In
this case it was a
Bearish Joker
Engulfing Candle.
POW!

=Stop
Pattern #3: Master Gnome Swing Trading

Beware of the Chart Gnomes

This strategy may look funny, but if you can master it, you will be
laughing all the way to the Bank.

First you have to go buy a Garden Gnome at KMart. Then every

so often hold it up to your chart and see if the candles Trace his
Left side.

When it does, you have to sell as soon as price reaches the top
of his Gnome Hat (X Marks the Spot) As soon as you have one
completed gnome pattern look for many more to follow because
Chart Gnomes Travel in Packs.
 Master Gnome
Swing Trading
X

X X
X
X
 Pattern #4: The Smoking Monkey

The Pattern that Started it All

This strategy is absolutely useless. I mentioned to Max one day
that the Ichimoku Cloud looked like a puff of smoke from a
Smoking Monkey.

If you trade this pattern, you are guaranteed to lose money.

 Pattern #5: The Drinking Buffalo
This Pattern is more advanced, so if you haven’t mastered the Smoking
Monkey, you need to move back in with your mother and find your
roots. Or your childhood swamp.

When trading the hind legs (a), up to the hip (b) and back down to the
front legs (c), only a clairvoyant could tell that this will turn into the
Drinking Buffalo, so it should be traded with a regular rollover strategy.
But by the time it gets back up to the shoulder (d), you should be
thinking “hey, we’re forming a Drinking Buffalo here”. When you see
the hamoji top on the shoulder, Sell to go down and finally get that drink
of yummy mud water...mmmmm (e).

Now you look for a hamojii with a higher low to tell you that the buffalo
has had its fill of Serengeti Yoohoo, and you can cover your short and
triple up on a long position to ride up to the final horn.
 a: hind legs
b: hip
c: front legs
d: shoulder
e: He’s going for the Yoohoo looking water!
f. final horn

b. d.

f.

a.
c.

e.
 Pattern #6: The Stoch Monster
Please don’t load up on a buy trade when the Stochastic (14,3,3, Slow)
is overbought (above 80).

When the Stoch is at this level, you only want to buy if the pair is
breaking out based on a news report. Otherwise, you should be selling,
not buying.
 Pattern #7: Empire State Jumping
This happens all the time and you should pay attention to it.

Sometimes a currency pair makes a fast run upwards, only to retreat

almost immediately. This is a sign that the big dogs (the banks) think
the pair was overbought and they start to pile on the sell orders. Jump
on with them, and ride the pair back down.

Make sure you have a parachute. This makes for a much more
comfortable landing.
 Pattern #8: Donkey Knows Best

With this new strategy, you Buy Bananas at the low and Sell
Bananas at the high. Just move your Donkey Kong across the
chart and collect your Bananas. Each banana represents a
potential trade.

If you’re having trouble trading, it’s because you don’t have a

600lb, knuckle dragging super hero bringing home the Bananas
for you.

This is probably our favorite pattern – when a currency pair

starts to trade in a rectangular range, we buy at the low and sell
at the high. We keep doing that over and over … and keep
making money.
Face of Determination
 Pattern #9: Hump & Shoulder

This is another real pattern. It’s really just a deformed head and
shoulders pattern. These really work. They are highly profitable
and highly reliable.
Quasimoto Hump & Shoulder
This H&S has a bad case of Scoliosis, but he can still ring the
bells of Profits. His neckline is crooked, so sell on a break below
that.

Sell on the
break of his
Scolyized
neckline
 Pattern #10: Whac-A-Frank

Now you can have Fun, Relieve Frustration, and Pile on the Pips
all in the comfort of your own Charting Platform with Whac-A-
Frank!

Every time you see a Frank pop it’s head up, give it a thorough
whooping with the included 10lb cast iron mallet.
Whac-A-Frank, Whac your way to Freedom!

This pattern was born from the realization long ago that the
major currency pairs, once they fall below the 62 EMA on the 1hr
chart, often cannot penetrate that level for a long time. You can
sell every time the pair hits that level on the way down.
Whac-A-Frank
Now you can have Fun,
Relieve Frustration, and Pile
on the Pips all in the comfort of
your own Charting Platform
with Whac-A-Frank!
Every time you see a Frank
pop it’s head up, give it a
thorough whooping with the
included 10lb cast iron mallet.
Whac-A-Frank, Whac your
way to Freedom!

*For Adult Children age 18 & up

** Batteries not included
 Pattern #12: Lando Pivots
A little known fact about the Baron Administrator of the Cloud City is that he
actually came up with a very clever strategy for playing the Intergalactic
Currency Markets. Lando discribes this strategy in an exclusive Interview:
Lando: “It all started when I began trading the Imperial Credits against the
Tatooine Wupiupi. My Trading Friends and I kept talking about opportunities we
saw after they already passed by when one day I thought..”wait a minute, I have
a hyper time feature in the Falcon!” From then on I would fly out at midnight in
using my hyper time drive, and I would return at 3am the previous morning with
Full knowledge of the markets next moves. I would draw lines on my charts and
my friends thought I was some kind of Jedi or something. After losing the Falcon
in a bet to Han, I just bought myself a Space Porsche and that just made it even
easier.
I used my new found wealth to position myself amongst the who’s who of the
Universe in my ultimate goal of reaching Political Reign over a Commodity rich
Province, securing my level of intergalactic importance for Millenia to come” said
Lando, sporting a stylish baby blue silk golf shirt with a matching crushed velvet
golf cape in our interview in the Cloud City.
 Lando Blasting his way through
Lando R1

Lando with Jackie Onassis and Alan Greenspan discussing the

future economy of the Universe
 Pattern #13: The Panda Study

This pattern is completely useless. But so cute.

 Sell at The ear

The
Nose

There are 2 important elements to the

Panda Study:
1: Ride the Body up and take half profit
& move stop at the nose.
2: Close whole long and Triple down on
a short once the ear is completed because
this bear just woke up & rolled over and The Panda Study
its ready to play, baby!
 Conclusion

There are a few patterns in here that, although entertaining,

really do work. The head and shoulders pattern is the real deal.
Quasimodo or not, you can make money trading a break of the
neckline on a head and shoulders pattern.

Divergence is for real. As for pivot points, I do use them in fast

moving markets to forecast stopping points. The Whack-a-Frank
is a fun way of demonstrating the power of the 62 Exponential
Moving Average on the 1hr chart.

I hope you’ve enjoyed the patterns. Happy trading!