So let’s start by answering the simple question of what is an energy signature? For me, as it relates to markets, it is simply a force or a combination of forces that have the power to move a market or hold it in place. The latter being something that is often overlooked by most astro traders. This is because low energy flat markets and high energy flat markets at first glance mimic one another when in fact the characteristics of each are quite different. One of the interesting facts about energy signatures is that there are countless numbers of them that coexist in both time and space. They will at times appear to act independently of each other while other times dependency is readily apparent. Each energy signature is different and changes over time. This is why you can have say an aspect that appears to work as a CIT one day and then to do nothing the next time around. In the first instance it was probably the dominant force of a small energy signature while the next time around it was likely subordinate energy in a much larger one. Therefore it is incumbent for the trader to isolate energy signatures that will influence the market under observation. Today we will look at a very simple example of this and how I use this information in my own trading.
Isolating energy signatures requires the user to identify two dominant energy forces over a span of time. When we put the two together we have an energy signature block and it becomes something we can use for trading purposes. For those of you who have followed my work in the past you will understand this to be the “Bookends” of Energy Flow. These bookends can be used in a variety of ways and can range from extremely complex to very simple. Today we will train our focus on the simple and it will be used with a geometrical pattern. (The pattern itself, how it works, and why it works are not important in today’s exercise and is not part of the discussion.) So what simple energy signature are we looking at today … sign changes!
Sign changes are very simple, often overlooked, energy signatures and something I use in my own trading every day. The first thing you need to do is square your chart. This is an entire conversation in and by itself and something else that I feel is often done incorrectly. All I will say at this time is that when you square a chart you should have a reason for the way you do it and not because “it looks good.” Once you have your chart squared you apply your geometric pattern and size it so it encompasses the entire energy block. In essence you are creating your own little universe made up of price and volume instead of stars and planets. The final step is the anchor position of your pattern. A lot of course will depend on the particular type of pattern that you are using. There could be more than one location and thus require experimentation on your part. Once you find the correct anchor to your pattern you place it on the open of the bar that begins the energy signature as this is the optimal location. If it doesn’t yield satisfactory results you can move the pattern up to two bars either forward or back and place your pattern within the range of these five bars. If you go beyond the five bar range you run the risk of “fitting” your pattern and fooling yourself about the patterns results. After the energy signature expires you simply start anew and go through the same procedure.
There are three charts below of the ZB contract that I will use as examples. The pattern that I am employing is part of a family of patterns in the GGHP(s) family and one that I have used often in my past posts. The first is of the past two day’s intra-day action that uses the sign change of RD. The second is a weekly that uses SA. The third is what one might call a more sophisticated energy signature that is rather difficult to work out and goes far beyond what we are doing here with sign changes. So why put it in the post? The answer is simple … I wanted to leave you with a question. How can it be that a market that is occupying a certain space and time be vibrating so seemingly well to two different harmonic energy signatures? Perhaps a conversation for the next time.
All the best,
Joe
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