Price has only two choices upon reaching a barrier: continue forward or reverse. Pattern Cycles focus trading efforts toward the more likely resolution, and point to low-risk execution in the direction of highest probability. 3-D charting offers early warning of reversals through the appearance of common congestion patterns. Your job is to locate the suspected reversal formation, and then wait for appropriate confirmation to signal a trade entry.

Most congestion patterns display a tendency toward continuation or reversal. This underlying bias generates their predictive power. Reversal patterns take longer to complete than continuation patterns and tend to be more dependable in their outcomes. Reversals occur more often than breakouts because congestion persists longer than trends and resists price change.

The first test of a high, low or major S/R level (such as a trendline) represents the most obvious reversal pivot. These identify major fade levels where smart money recognizes that ranges persist longer than trends. But rather than jump in with the crowd, learn to wait for its reaction at these levels before deciding which way to take the trade. Although a reversal carries higher odds, a violent breakout is always a possibility. Smart traders protect capital at these turning points with defensive risk management and tight stop losses.

The chart reveals that the big money hides just beyond the extremes of price congestion. For example, the breaking point in a topping reversal will lie just under the intermediate support that the market prints within the pattern. Violation of that low confirms the reversal. Traders can either sell the break or wait for a pullback to the violation point and sell there under quieter circumstances.

Price behaves differently at tops and bottoms. Bottoms take longer to form and declines off of tops tend to be more vertical than rises off of bottoms. This demonstrates a gravity principle within the markets. Price bars often appear to have a weight that influences their trend development. This tendency causes novice traders to develop an inappropriate gravity bias that reduces their ability to visualize upward price development.

One of the best exercises for defeating gravity bias is to take a price chart and throw it on the floor. From above, walk circles around the chart until you don't know which way is up. Hidden trades will then appear out of the confusion.

Reversals generate rewarding setups, but plan for the opposite outcome in every trade analysis. Many times, this pattern failure will yield a more profitable position than the one originally planned. Always take the time to see if an execution in the other direction might make sense. Charts consistently offer early prediction of these contrary events through unexpected behavior near common reversal pivots.