Breakthroughs in Technical Analysis: New Thinking from the World’s Top Minds (David Keller, 2007)

Drummond Geometry

1. Charts have patterns that can be identified and will reoccur. 
2. Similar chart patterns exist in different time frames. 
3. Prices in a given time frame will center on a consensus value, and when price moves away from that consensus, it will tend to revert to a mean. But this mean itself will be moving and changing as the market unfolds.
4. Support and resistance are real phenomena, and can be measured, predicted, and projected.
5. Time frame charts are interrelated, move simultaneously, and can be visualized as existing within each other.
6. Historical price charts of freely traded financial markets are the visual representation of human crowd psychology in action.
7. Support and resistance in different time frames react to price in predictable ways. The shorter time frames will react first, and then progressively longer time frames kick in.

Types of Trading

1. Trend 
2. Congestion entrance 
3. Congestion action 
4. Congestion exit 
5. Trend reversal

Candles

Deconstructing the Market

• Deconstruction, a method of analysis that emphasizes the relational quality of meaning, involves discovering, recognizing, and understanding the underlying—and unspoken and implicit—assumptions, ideas, and frameworks that form the basis for thought and belief

Four Stages of Sticker Shock

1. In stage one (shock denial), a dramatic directional move beyond the well-accepted value area is halted by a feeling of “sticker shock” on the part of participants. The new price point stirs feelings of “I can’t believe it; this won't last" 
2. In stage two (anger), usage slows down as people search for alternatives or attempt to change long-standing patterns of behavior, triggering a counter-move that seeks an opposite end of value. In this stage the extremes of a trading range are first established. Normally the market retraces a portion of the initial dramatic directional range. The feeling here is "I won't buy/sell it. I’ll take my money/product elsewhere”. 
3. Stage three (bargaining) ushers in the beginning of development, which explores value and builds consensus to determine what is acceptable and unacceptable within the range established in stage two. During this phase, participants grow used to the price as 134 shock and anger wear off. (This phase usually creates either a lowercase b-shape or an uppercase P-shape profile.) “I’ll just use/sell what I need to get by." 
4. After a brief or protracted period of bargaining, stage four (acceptance or rejection) unfolds in one of two ways:
• Acceptance. This represents resignation to the new level of prices and acceptance that it is fair. The market breaths a sigh that says. "This is the new standard." At this point, the initial imbalance revives and the cycle begins anew.
• Rejection. The market ultimately rejects the new price and returns to where the move originated.