Tuesday, February 1, 2011

$Rifin Inverse Pattern: Bottoms/Tops

One of my favorite techniques is to use inverse patterns to identify tops and bottoms.  This technique worked extremely well for me in 2010.  For some reason it works particularly well with $Rifin.  The theory behind it is that cycles rhyme again and again as there is a certain elasticity to market behaviour.  Another way to think about it is that under the same technical characteristics (due to similar complacency/fear of traders at a given time), the market will react in a similar manner each time.  Hence the cyclical patterns.

I am simply counting tops and bottoms on the 1st chart below - the numbers do not represent Elliot Waves. 

Rather than using the same analytical methods as others, I have found that the most valuable methods are the ones others are not using or seeing.  There is a saying: if it is obvious - it is obviously wrong.  So true.

Note: I am not calling a "flashcrash" type of move specifically, but rather the pattern suggests an extreme selloff may happen in the short term. 

I had suggested a more gradual selloff in a previous post as another possibility.  I am not ruling that out just yet either.  Both are very bearish.  Let's see what signals the market provides next... 

4 Hour Chart

The same topping pattern has happened before as shown below, and it is very similar to what I have derived from the inverse of the September 2010 rally as I have drawn in the above chart:


  1. We might see circuit breakers tested soon....

  2. Zoom in on the end of August 2010 bottom. If you compare that to the current top in 2011, then one more small dip, and lower high would complete the pattern. Freefall after that?!

  3. $rifin triple top has held and we have now seen the dip and lower high as well. Pattern complete. Mkt could now be vulnerable to an extreme selloff.

  4. $rifin took out the high of the triple top so I have to tweak things slightly. This basic pattern is intact, and from what I see should work. All that is happening is I fine tune the tops and timing.

    Stay tuned - an update is coming soon. $rifin should fall hard over the next few days according to the updated pattern.