[gassah]

Ray makes a distinction between springs in uptrends (continuation) and springs that occur as reversal patterns. A repo is borrowed from Joseph Hart's Trend Dynamics and stands for reverse potential, and they are the continuation springs. The reversal springs happen after a prolonged downtrend.

""So in an uptrend, the continuation patterns occur at the bottom and the CIT pattern occurs at the top."

I believe he means the continuation springs are by definition at the bottom of the range and the CIT pattern in an uptrend or upthrust, occur at the top of the range.

Another interpretation is that continuation springs are more likely to happen early in an uptrend, early in the mark-up phase, and CIT patterns (upthrusts) occur after a prolonged mark-up and distribution (the top).

This point about only looking for CIT patterns after a prolonged trend is important. Apparent CIT patterns are much more likely to fail, with the trend continuing, if the trend is immature. This is why shorting upthrusts too early in a trend is not a good idea.

[bigbird]

Dear Rob,

As you know, one of the uses of X, AB labeling that Ray taught is to allow us to compute the Maximum Extension (ME), which in turn allows us to decide whether a spring pattern has formed. Unfortunately, I met some problems labeling, I will use the figures attached to describe the problem. Though I have gone back to revise the X, AB labeling, I'm not able to ascertain the answer to my question.

Referring to figure 1.jpg, I would have labeled X, A, B at 3, 4, 5. But Ray would sometimes label X, A, B at 4, 5, 6. This would give a different ME, which may give a different conclusion related to whether a continuation spring formed at 7.

I'm not sure which one to use, 345, or 456

For 2.jpg and 3.jpg, how would you have labeled X, A, B

[gassah]

Hi,

The upper boundary is either 10% of 3-4 or 20% of 4-5, whichever is greater, assuming 3-4 is at least impulse mean.

The bottom boundary doesn't use 3-4, i.e., you don't take 20% of 3-4 and apply it at the bottom boundary. In this case 4-5 marks the boundary of congestion because 7 hasn't retraced far enough back into the range to count as a point to consider.

I'll address the rest later.

[gassah]

I'd use 4 and 5 as A and B in the second example.

I'm assuming you are looking at the 5d swings only. In example 3, 7-8 are AB. 4 to 9 is a downtrend, not congestion, because 8 did not retrace above the PBZ of 5-6. Therefore 7-8-9 is its own entity and the ME is 20% of 7-8. You can also use 10% of 6-7 if its impulse mean but it might not be. If it isn't then move back to 10% of 4-7.

[bigbird]

Dear Rob,

Originally Posted by gassah »

The bottom boundary doesn't use 3-4, i.e., you don't take 20% of 3-4 and apply it at the bottom boundary.

Do you mean 10% of 3-4 and not 20% Anyway, this is something new to me. I thought we should apply 10% 3-4 on the bottom boundary as well.

In what situations would you label 456 as XAB I attached one of Ray's charts. The blue line is the 5D while the red 18D. He labeled 456 as XAB in this situation, but I'm unable to figure out why this is so.

Thanks!

[gassah]

The opposing boundary always uses 20% AB. 10% XA is only in the direction of the trend. I'm pretty certain of this, unless you can point out where it says otherwise. Thanks.

[gassah]

Ray might have used the labeling you mention to identify the PBZ for the spring. He'll use the latest inside swings for this purpose.

[gassah]

In addition, Ray's labeling the counter-trend reaction with XABC and using AB to generate the ME. C cannot accept beyond the ME if a spring is going to occur.

For the upside 5d breakout you'll have to re-label and in this case use the XA or XC as the boundaries which move the ME back above X.