The Qualitative Value of a Pattern, Part III, 02/27/08
The Fundamental Question of Pattern Quality -
Q: Is the outlook for the market more clear today, than it was yesterday?
Or similarly,
Q: Is the outlook for the market more clear now, than it was at now - dt?
There are three possiblities -
A: If the outlook for the market is more clear, then the qualitative bias is bullish
A: If the outlook for the market is less clear, then the qualitative bias is bearish
A: Iff the outlook is unchanged, the qualitative bias is the same as is was at time t-1
Part 1 of 'The Qualitative Value of a Pattern' is here.
Part 2 is here.