Foldback Patterns

Hello and welcome to diary of a trader. We’re going to go over at a little known and really never talked about a form of analysis called Foldbacks.

Now Foldback are a technique that Michael S. Jenkins discussed in his book The Complete stock market trading and forecasting course and in it he talked about mirror image Foldback and add that he noticed early in his career that when he looked at stock charts he noticed while there’s some patterns that seem to repeat themselves. And of course, that’s nothing new but what he noticed was that they would operate on the inverse of the move. So it would basically retrace the same kind of pattern that was already done. And I know when I first read this book I had never seen anything about this before; I’ve never read anything about this before. It’s not anything that anybody ever really talks about, but he talked with one of the great analysts George Lindsey. And George let Michael Jenkins and George Lindsey they got together and they were talking about this and and they thought going into a lot of a history for the detail a fallback is essential the repeated past price action retracing.

For instance, if we want to look at if I can find one here I was just looking at what I thought right. Read here for example. I mean we see this play out quite often, but it’s actually shocking how often these repeat themselves if we look at this zone right here so if we see we have this kind of a pattern set up followed by a full retracement of that.

Notice how the patterns are very similar in their moves. It’s actually pretty shocking. And this can go on and on. And the point that that Jenkins was making was that we can see another one right here where we have

Top here in the middle and then all the way to the top.

These are called Mirror Image fallbacks. And even the old traded zones are very similar and it’s it’s really fascinating how often these play out. And this is just on an hourly chart. This happens on multiple time frames and on multiple different ways to look and it makes forecasting and or trading a little bit easier if you can gauge where in a pattern we’re seeing something repeat.

Now this is taking a lot of practice and it is absolutely subjective and nothing is going to repeat 100 percent of the exact. I mean it’s not a 100 percent your image. I mean humans aren’t like that. And the market is not like that. But certainly we could take you know what we could take a tool that is in trading view that can assist with this and it’s it’s on the one two three four five six seven toolbar down and we want to go to bar Panner.

All right. And so what we’ll do, we’ll just click on our pattern and then the trick is you want to start it on an all-time high or an all-time low. So start the bar pattern. So I’m going to start from the candlestick after that high single click and then I’m going to drag it down to here.
And then what I’m going to do is I’m going to right click on it and I want to go to Myriad. And then I will just place that in where I kind of had originally started it. And so what I’m looking at right now is that the past price action and it seems to be following this pattern fairly consistently you know we can. I mean this is this is actually a pretty shocking example how natural markets are and how they move.

And so if we’re looking at the chart here what is our expectation of removal our expectation of a move is to go a little bit lower and then have some significant bounces to the top. Now we’re not talking about you know completing the exact price levels we’re just talking about completing and trading in the same and the same pattern.

All right. Like if we if we have a drive up the first peak is here was it was here and then you know for actually, let me reset this here.

So we’re trading and I see that there is some type of market high at this level here and that shot up not too far after there is another swing high here. Up not too long after another great there.

And so we can see these were just looking to see how there are going to be any spring highs and lows match that that keep showing up as we as we go. And yes in fact, there are swing highs and lows that have shown themselves.

And so this is just a very interesting way to look at how to traders, these mark any market worth using these using just pullbacks and you can use them on multiple time. And I want to show you something that is pretty neat.

If we go to a weekly chart and this is the this is the dollar yen. Do you see this chart? It looks pretty much like a mirror full back. We have slight deviations in the time and there’s looks like there’s somewhat of a gap more here. But the point is there was a swing high near this time. Yes there a Swing High here a little one. Was there a larger swing at the top? Round The Sun. Yes. Was there a Swing Low Down here or rather I’m looking for a Swing Low Down here in the future. Did that happen? Yes. And so you can see that market the market does like to tread very close to this structure. And if we zoom in and we look at the current price action compared to what we have going on

Now you know it looks like we’re supposed to be on some type of swing high which we did in the spring low and then a response. We had some type of swing high around here.

So are we looking at some higher, swings than the previous year to show up. And that is an example of foldbacks. You know there are a lot of fun to use on. Any instrument if you look at the pound. And we look at. Let’s go ahead and take a look at the hourly if we want to if we are to see some type of foldback pattern happening. Then we can kind of anticipate where we want to draw. A Foldback. So from from the pound, dollar pair we would we would start the next bar after the high. And so we would start here. And I would drag it down all the way to the to the all time low loops well not the all time low but the lowest and our. Set up I’m sorry. Just to show the example of this.

And so there’s the full. There’s our there’s our bar. Let’s go to the mirror image of it. And let’s put that on top of our current price action. And so what I’m looking for and might have to stretch it out of it so I can get a better

Yes. This does seem to be following the structure pretty nicely. And so what this is telling me is that the pound is supposed to have a further high going forward here.

This is a great tool to use because markets do travel in the same patterns just like humans do and we tend to reflect the behavior of the past frequently and this is just a visual representation of that behavior.

And I think it’s a fantastic tool to help you determine where a direction may be going and into your current trading. Hope you found this video interesting. Thank you for watching. I look forward to talking with you and our future videos bye.

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