3. Coming off a double bottom
When a stock has met support (demand) at a given level following a decline the stock must prove itself that it can hold at that level should the stock tem-porarily rise and then fall back again. If it is met by buying at the same bottom level then the stock is in a much better position to make a more sustained ad-vance. The astute trader buys the stock after the double bottom has been recorded and the stock has begun to rise.
There are two observations to keep in mind regarding double bottoms:
(a) The lower the bottom the more bullish it is.
(b) The farther apart the bottoms are the more bullish it is.
4. W Pattern
By the very shape of the letter we can see that the double bottom formation traces out a letter W. The middle leg of the W represents a temporary level of supply (upside resistance) and when the right leg of the W exceeds the middle leg it constitutes a very important buy spot.
The growth pattern is characterized by a long continuing advance in the price of the stock with a tendency toward acceleration on the upside in the latter stages of its growth pattern. The astute trader who is only aiming at maximum profits is only going to pay attention to this type of pattern during the later stages of upside acceleration.
6. Cyclical at Historic Lows
This pattern is listed last because it contains the greatest degree of risk, a risk that can only be minimized by an expert judgment of timing factors. If the timing is right, the gains can be very great.
For best results the six key patterns must be geared to the market
Newton would have been fascinated with the stock market as it exists today because he undoubtedly would have enjoyed watching his famous Law of Gravity at work on security prices.
(Source: A Strategy of Daily Stock Market Timing for Maximum profit, by Joseph E. Granville)