Charting  |  JUN 2001

The Folding Rule by Viktor Likhovidov

The Folding Rule by Viktor Likhovidov How about a simple charting technique to ride the wave and get off in a timely manner? Here’s a reversal pattern I frequently observe on hourly charts of currencies and sometimes use in trading. I call it the folding rule due to its resemblance to the carpenter’s tool. This pattern appears on accelerating markets, as shown in the hourly chart of the yen for March 1999 (Figure 1). Here, trendline 1 (the first ray of the folding rule), drawn through two local minimums as a support line, determines the initial direction of the growing market. But then the steeper upmove started and support line 2 (ray 2) was created. Finally, a new, steeper bullish trend (ray 3) appeared. The breach of the third ray marked the end of the bullish market and gave the sell signal.

by Viktor Likhovidov