Profiting with Harmonics Leslie Jouflas Founder of www.TradingLiveOnline.com Presents Profiting with Harmonics© 2010 http://www.tradingliveonline.com/trial

Books By Leslie Jouflas “Larry Pesavento and Leslie Jouflas, the quintessential traders of chart patterns and the techniques of past masters of technical trading, have put together a compilation of their studies. Their experience extends over forty years. This book covers the essence of chart patterns trading plus the mental preparation necessary for successful trading. There is something in this book for both the beginner and experienced trader, Highly recommended.” - John Hill, President, Futures Truth Co. TRADE What You SEE How to Profit from Pattern Recognition www.tradingliveonline.com

Books By Leslie Jouflas Essentials of Trading: It’s Not WHAT You Think It’s How You Think www.tradingliveonline.com

Leslie Jouflas - Founder of tradingliveonline.com Leslie began trading in 1996 and left a 17-year airline career in 2000 to pursue a full-time trading career. She has studied many trading methodologies, including Elliott Wave, options strategies, momentum trading, classical technical analysis, and Fibonacci ratios and patterns. After trading stocks and options on stocks, she now trades futures and commodities with an emphasis on the S&P 500 market. She has managed private accounts as well as trading her own private account. Leslie is a member of the Northwest Hedge Fund Society and has co-authored two books, Trade What You See – How to Profit from Pattern Recognition (Wiley & Sons, 2007), published in English and Japanese and Essentials of Trading: It’s Not WHAT You Think, It’s HOW You Think (Traders Press, 2006), and has many published articles for such publications as Trader’s Journal, Active Trader, and Technical Analysis of Stocks & Commodities. Leslie founded www.tradingliveonline.com website which is an educational website and live trading room where traders learn real time trading skills. The website also offers the Trading Live Online Mastery Coaching programs for traders wanting to learn a proven trading method, learn a process to increase trading skills, and learn to trade to achieve consistent results. www.tradingliveonline.com

What we will cover Defining a Harmonic Number Vibrations in Price Swings Repetition in Price Swings Primary Harmonic Numbers in the SP 500 and other markets Practical Use of Harmonic Numbers Introduce the concept of using Harmonic swings and learning to recognize when the market is making repetitive swings

Harmonic Numbers Har-mon-ic – Physics – Any component of a periodic oscillation whose frequency is an integral multiple of the fundamental frequency Harmonic numbers are vibratory swings These are repetitive swings in each market and stock Harmonic numbers are at the root of the basic pattern structures Harmonic numbers can be used in trading applied to entries, exits and stop loss placement The specific term was coined by Jim Twentyman

Markets Do 1 of 3 Things 1. Move Up The strength of an up or down move tells us if the markets are contracting or expanding

2. Move Down

3. Move Sideways When Markets or stocks form sideways moves or coils, they are storing energy, eventually the energy will be move out of the range one direction or another.

Vibrations in Price Swings A Harmonic can be thought of as a ripple effect when an object is dropped into a pool of water

Vibrations can be small to medium The size of the ripple depends on the size of the object

Or Vibrations can be large and sudden; example of a large vibration and expansion following a FOMC announcement News events can create large, sudden and extreme moves, this move in the bonds was over a full 2 pt move in a matter of minutes

This chart may at first appear, chaotic, no order or trend to it Random Price? At first glance this price chart may appear chaotic and random

Look also at the down moves and how similar those are. Harmonics Using a simple cloned line you find the harmonics or repetitive swings in any market or stock

Swings that are similar in size are ‘Harmonic” Euro market forms frequent ranges, storing energy and then sudden moves in either direction out of those ranges

Example of Coil in Euro – 15 Minute Chart Contraction or coiling with sideways movement followed by large move up

Adding Order to Chaos Random Swings Harmonic Swings Some would call these random swings, these are very harmonic swings

The Harmonic Swings form Tradable Patterns 30 minute chart of goog illustrates how the harmonic swings form patterns that are tradable

SP 500 Harmonic Numbers These are common Harmonic Numbers in the SP 500; the 4 Point swing is a common swing in the SP 500 Emini followed by these harmonic swings 5.4 points – a primary harmonic in this market 6.85 points – derived using 5.4 x 1.27 8.7 points – derived using 1.618 x 5.4 10.8 points – derived using 5.4 x 2 16.2 points – derived using 5.4 x 3 21.6 points – derived using 5.4 x 4 Use the numbers as more of a range rather than the exact tick

SP 500 2 Minute Chart – Primary Harmonics Here is repetition of the 4 pt swing and expansions of it

SP 500 5 Minute Chart - Swings in Points Moving to a 5 minute chart you can see the swings are multiples of the basic harmonics

SP 5 Minute Chart - Expansion Here the swings are expanding

Bond Market Almost perfect harmonic swings that formed this ab=cd sell pattern in bonds, the first swing is within 4 ticks of a full point and the second swing is within 2 ticks of a full point.

Bond Market – 20 ticks Crude Oil – 44 and 88 Harmonics in other Markets – from page 34 of Trade What You See – How to Profit from Pattern Recognition Bond Market – 20 ticks Crude Oil – 44 and 88 Dow Jones – 35, 105 and 70 Euro Market – 35 and 70 Gold Market – 11 and 17 Silver Market – 18, 36 and 12 Wheat – 11 and 17 Soybeans – 18 and 36

Practical use of Harmonic Numbers Help you understand the rhythm and price swings of a particular market or stock Help you in using stop – loss placement. Help you in taking profit targets Help you in awareness of market contraction of expansion stages Help you in your understanding of Harmonic numbers with Fibonacci ratios and the formation of specific pattern and trade setups