Pristine Patterns 1.01a

Pristine Method Pattern Scans by Greg Capra For MetaStock 10.1 (and higher) User's Manual Version 1.0

All Rights Reserved Copyright © 2007 Equis International 90 South 400 West, Suite 620 Salt Lake City, UT 84101 Printed in the U.S.A.

Equis and MetaStock are registered trademarks of Equis International. Microsoft Windows, Microsoft Windows 95, 98, 2000, XP, Vista, and Microsoft Explorer are trademarks of Microsoft Corporation. All other product names or services mentioned are trademarks or registered trademarks of their respective owners. This product is not a recommendation to buy or sell, but rather a guideline to interpreting the specified analysis methods. This information should only be used by investors who are aware of the risk inherent in securities trading. Equis International, Greg Capra, and Pristine Capital Holdings, Inc., accept no liability whatsoever for any loss arising from any use of this product or its contents.

 

Table of Contents Getting Started ....................................................... 3  Installing and Pristine Method Pattern Scans ............ 3  About Pristine Method Pattern Scans ................. 4  Understanding Pristine Method Pattern Scans .. 5  The Pristine Trend Indicator ....................................... 5  Guerrilla Setups ......................................................... 6  The Pristine Buy Setup ......................................... 7  The Pristine Sell Setup ........................................ 10  The Bear Trap Setup............................................ 13  The Bull Trap Setup ............................................. 15  The Bullish Mortgage Play .................................. 17  The Bearish Mortgage Play................................. 19  The Red Bar Ignored Play ................................... 21  The Green Bar Ignored Play ............................... 23  The Pristine Basing Setup .................................. 25  The Above Average Volume Setup .................... 27  The Bullish Changing of the Guard Setup ........ 30  The Bullish Bottoming Tail Setup ...................... 32  The Bearish Changing of the Guard Setup ....... 34  The Bearish Topping Tail Setup ......................... 36  The Climactic Buy Setup..................................... 38  Pristine Method Pattern Scans

i

Table of Contents The Climactic Sell Setup ..................................... 41  Using Pristine Method Pattern Scans using The Explorer™ .................................................. 44  Understanding Pristine Method Pattern Scan reports in The Explorer™................................. 45  Using Expert Advisors™ with Pristine Method Pattern Scans .................................................... 46  Understanding Expert Advisors™ with Pristine Method Pattern Scans ........................ 47  About Pristine ...................................................... 48  About Greg Capra................................................ 49 

ii

Pristine Method Pattern Scans

Getting Started

Getting Started Installing and Pristine Method Pattern Scans To install the Pristine Method Pattern Scans: 1. Insert the Program CD into your drive. The setup starts automatically. Or, if the auto-run feature of Windows isn't enabled on your system, a. Click the Start button and choose Run. b. Type "D:\SETUP.EXE" in the Open box and click the OK button. (Note that "D" represents the letter assigned to your CD-ROM drive. If your drive is assigned a different letter, use it instead of "D".)

2. Carefully follow the on-screen instructions. To start using Technical Patterns the Pristine Way: 1. Run MetaStock. The Pristine Method Pattern Scans plugin will be available in The Explorer as well as in certain experts and indicators.

Pristine Method Pattern Scans

3

Installing and Pristine Method Pattern Scans

About Pristine Method Pattern Scans Pristine Method Pattern Scans is a collection of Pristine Capital Management’s favorite setups for technical trade setups. It is designed to highlight and find these powerful patterns in the market. The following tools will be added to the MetaStock program as Explorations, Expert Advisors, and Templates: • • • • • • • • • • • • • • • •

PM – Above Average Volume Setup PM – Bear Trap Setup PM – Bearish Changing of the Guard Setup PM – Bearish Green Bar Ignored Play PM – Bearish Mortgage Play PM – Bearish Topping Tail Setup PM – Bull Trap Setup PM – Bullish Bottoming Tail Setup PM – Bullish Changing of the Guard Setup PM – Bullish Mortgage Play PM – Bullish Red Bar Ignored Play PM – Climactic Buy Setup PM – Climactic Sell Setup PM – Pristine Basing Setup PM – Pristine Buy Setup PM – Pristine Sell Setup

In addition, the following Exploration will also be added to your Exploration options: • PM – Master Scan

4

Pristine Method Pattern Scans

Understanding Pristine Method Pattern Scans

Understanding Pristine Method Pattern Scans This section is designed to give you an overview of the patterns used in Understanding Pristine Method Pattern Scans. It outlines the basic concepts for the patterns and how to trade them. For more information on trading using the Pristine Method (including all of the terms discussed) and concepts such as setups, scanning, target setting, trade management etc., go to: www.Pristine.com/seminars.

The Pristine Trend Indicator At the bottom of each chart with a Pristine Expert attached you will see the Pristine Trend Indicator. Green denotes a bullish uptrend, making higher pivot highs and higher pivot lows. Yellow indicates a neutral sideways trend or that there has been a retracement of some significance within the trend. Red denotes a bearish downtrend of lower pivot highs and lower pivot lows. In general for swing trading you want to be trading WITH the trend. However, guerrilla patterns and reversals entries can be used in all market environments.

Pristine Method Pattern Scans

5

Understanding Pristine Method Pattern Scans

Guerrilla Setups Guerilla setups are also excellent signals for the intraday trader to focus on. Since they typically continue in the direction of the signal for several days, intra-day traders can take advantage that by entering on retracements on the shorter time frame being used. This is a favorite trading tactic used in the Pristine Method Trading Room (PMTR) everyday. If you would like to see how Pristine traders take advantage of Guerilla setups intra-day go to www.pristine.com and sign up for a free trial to the PMTR.

6

Pristine Method Pattern Scans

The Pristine Buy Setup

The Pristine Buy Setup General The Pristine Buy Setup is a “trend-following” swing trading setup. It was created to enhance your ability to buy pullbacks at specific points where odds are favorable for a move back in the direction of the trend. It can be used either to enter pullbacks in an uptrend or pullbacks in a sideways trend. It generally will not trigger a buy in a downtrend.

Requirements The security had been in either an uptrend or sideways trend on the daily chart. Those in uptrends are more easily identified by a rising 20-period moving average above the rising 40-period moving average. They will also be reflected by the Pristine Trend Indicator’s green crosshatching in the lower portion of the chart. Those in somewhat of a sideways trend may have had the most recent pivot low break below the prior pivot low. This is evidenced by the Pristine Trend Indicator’s yellow crosshatching denoting some caution as to the general trend. From there, the stock pulls back three to five daily bars by making some combination of either lower highs or red bars. The setup is an anticipatory one. When you see this pattern, you can then set an alarm for either of the following two conditions as a potential entry for the following day.

Pristine Method Pattern Scans

7

The Pristine Buy Setup

Triggers Condition1. The stock moves up and breaches the prior day’s high. In this case you enter a long position with a stop loss under the current day’s low or the prior day’s low, whichever is lower (A general assessment as to the risk reward of the two alternatives may be used to determine which is preferable to you on a case-by-case basis.) Condition2. For those stocks whose prior day’s bar is a wide range red bar, (or for those stocks which gap up the following morning), you can consider marking off the 30 minute high, and upon subsequent breach of the 30 minute high, enters a long position with a stop under the current bar’s low. Alternate tactics are taught in Pristine’s seminars.

Targets The target area is generally the prior pivot high, however, in very strong markets you could consider taking a portion of your gains at the initial target and looking for new highs with the remaining position.

Management General management approach is to trail stop losses behind the prior day’s low, and considering additional protective measures once the stock is significantly on the way to the target.

8

Pristine Method Pattern Scans

The Pristine Buy Setup

Alternative Management Another form of management takes shape from using pivot lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Often as the pullback ensues the stock exhibits one or several narrow range bars or bottoming tails. Often the pullback begins to reverse in an area of Major or Minor support, depending on whether the trend is sideways or up. These all serve as tools that you can use to enhance your choice of which setups to actually trade.

Pristine Method Pattern Scans

9

The Pristine Sell Setup

The Pristine Sell Setup General The Pristine Sell Setup is a “trend following” swing trading setup. It was created to enhance your ability to short rallies at specific points where odds are favorable for a move back in the direction of the trend. It can be used either to enter short on bounces in a downtrend or bounces in a sideways trend. It generally will not trigger a sell in an uptrend.

Requirements The security had been in either a downtrend or sideways trend on the daily chart. Those in downtrends are more easily identified by a falling 20-period moving average under the falling 40-period moving average. They will also be reflected by the Pristine Trend Indicator’s red crosshatching in the lower portion of the chart. Those in somewhat of a sideways trend may have had the most recent pivot high break above the prior pivot high after being in a downtrend. This is evidenced by the Pristine Trend Indicator’s yellow crosshatching denoting some caution as to the general trend. From there, the stock moves up three to five daily bars by making some combination of either higher lows or green bars. The setup is an anticipatory one. When you see this pattern, you can then set an alarm for either of the following two conditions as a potential entry for the following day.

10

Pristine Method Pattern Scans

The Pristine Sell Setup

Triggers Condition1. The stock moves down and breaches the prior day’s low. In this case you enter a short position with a stop loss over the current day’s high or the prior day’s high, whichever is higher. (A general assessment as to the risk reward of the two alternatives may be used to determine which is preferable to you on a case-bycase basis.) Condition2. For those stocks whose prior day’s bar is a wide range green bar, (or for those stocks which gap down the following morning), you can consider marking off the 30 minute low, and upon subsequent breach of the 30 minute low, enters a short position with a stop over the current daily bar’s high. Alternate tactics are taught in Pristine’s seminars.

Targets The target area is generally the prior pivot low, however, in very weak markets you could consider taking a portion of your gain at the initial target and looking for new lows with the remaining position.

Management General management approach is to trail stop losses behind the prior day’s high, and considering additional protective measures once the stock is significantly on the way to the target.

Pristine Method Pattern Scans

11

The Pristine Sell Setup

Alternative Management Another form of management takes shape from using pivot highs in a smaller timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Often as the initial bounce ensues the stock exhibits one or several narrow range bars or topping tails. Often the bounce begins to reverse in an area of Major or Minor resistance, depending on whether the trend is sideways or down. These all serve as tools that you can use to enhance your choice of which setups to actually trade.

12

Pristine Method Pattern Scans

The Bear Trap Setup

The Bear Trap Setup General The Bear Trap Setup is actually a bullish setup. It is a guerrilla setup based on two bars with the trigger after the second bar. Guerrilla setups often are not trend following setups but rather setups that rely on some form of surprise or reversal. Often they start new trends however sometimes they merely serve to reverse a move on a short two to ten day timeframe.

Requirements The security exhibits a red daily bar. (Generally the wider the better, and closing near the low is better.) With the stock having moved down and closing near the low an opportunity might be in place for a reversal.

Trigger The stock opens somewhat neutral and during the current day moves up over the high of the prior red bar. In doing so, it slowly squeezes the traders who were either short —or had sold their long positions— into either covering those shorts or possibly repurchasing their sold longs. This creates an imbalance in the supply and demand for the stock as more traders notice the possible reversal in place. On the following day, Buy the stock as it moves over the prior day’s high with a stop under the current day’s low.

Pristine Method Pattern Scans

13

The Bear Trap Setup

Targets The target area is generally the next area of daily resistance. So although the entry requirement is only a two-bar setup with the third being the trigger, the wider the price void between the entry the resistance the better. The trade can last between two and ten days. The wider targets generally take longer and can be considered if the overall pattern encompassing the three bars appears to be a potential trend changing event.

Management General management approach is to trail stop losses behind the prior day’s low, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method Courses.

Enhancements to the Setup Climactic volume on the prior wide range red bar as well as high volume on the engulfing green bar would imply the setup is more potent. Note: Although this is a guerrilla play, it might be enhanced if the move back is in the direction of the general trend.

14

Pristine Method Pattern Scans

The Bull Trap Setup

The Bull Trap Setup General The Bull Trap Setup is actually a bearish setup. It is a guerrilla setup based on two bars with the trigger on the third bar. Guerrilla setups often are not trend following setups but rather setups that rely on some form of surprise or reversal. Often they start new trends however sometimes they merely serve to reverse a move on a short two to ten day timeframe.

Requirements The security exhibits a green daily bar. (Generally the wider the better, and closing near the high is better.) With the stock having moved up and closing near the high an opportunity might be in place for a reversal.

Trigger The stock opens somewhat neutral and during the current day moves down under the low of the prior wide range bar. In doing so, it slowly squeezes those traders who were long into selling their positions. This creates an imbalance in the supply and demand for the stock as more traders notice the possible reversal in place. Short the stock the next day as it moves under the prior day’s low with a stop over the current day’s high.

Pristine Method Pattern Scans

15

The Bull Trap Setup

Targets The target area is generally the next area of daily support. So although the entry requirement is only a twobar setup with the third being the trigger, the wider the price void between the entry and the support area the better. The trade can last between two and ten days. The wider targets generally take longer and can be considered if the overall pattern encompassing the three bars appears to be a potential trend changing event.

Management General management approach is to trail stop losses behind the prior day’s high, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot highs in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Climactic volume on the prior wide range green bar as well as high volume on the engulfing red bar would imply the setup is more potent.

16

Pristine Method Pattern Scans

The Bullish Mortgage Play

The Bullish Mortgage Play General The Bullish Mortgage Play is actually a very bullish guerrilla setup. It is a guerrilla setup based on one bar with the trigger on the second bar. Guerrilla setups often are not trend following setups but rather setups that rely on some form of surprise or reversal. Often they start new trends however sometimes they merely serve to reverse a move on a short two to ten day timeframe. The Mortgage Play has the highest degree of surprise associated with any of the Pristine Guerrilla Setups.

Requirements The security exhibits a red daily bar. (Generally the wider the better, and closing near the low is better.) With the stock having moved down and closing near the low an opportunity might be in place for a reversal. With the stock having moved down at least one day and closing near the low an opportunity might be in place for a reversal.

Trigger The day after the red bar, the stock gaps over the entire prior bar. In doing so, those traders who were shorting the stock may feel trapped short or —if they were prior longs who had sold, feel as if they should reverse their recently proven wrong decision of selling the stock and so feel compelled to buy the stock back. This may possibly result in an imbalance between supply and demand pushing the stock higher.

Pristine Method Pattern Scans

17

The Bullish Mortgage Play On the following day, Buy the stock over that day’s high with a stop under the recent red bar’s low.

Targets The target area is generally the next area of daily resistance. So although the entry requirement is only a two-bar setup with the third being the trigger, the wider the price void between the entry the resistance the better. The trade can last between two and ten days. The wider targets generally take longer and can be considered if the overall pattern encompassing the three bars appears to be a potential trend changing event.

Management General management approach is to trail stop losses behind the prior day’s low, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Climactic volume on the prior red bar is not required however it would enhance the setup implying more traders are caught on the wrong side. High volume on the day of the gap would imply the setup is more potent. This setup creates the highest level of surprise that a Pristine Guerrilla Pattern can create.

18

Pristine Method Pattern Scans

The Bearish Mortgage Play

The Bearish Mortgage Play General The Bearish Mortgage Play is actually a very bearish guerrilla setup. It is a guerrilla setup based on one bar with the trigger on the second bar. Guerrilla setups often are not trend following setups but rather setups that rely on some form of surprise or reversal. Often they start new trends however sometimes they merely serve to reverse a move on a short two to ten day timeframe. The Mortgage Play has the highest degree of surprise associated with any of the Pristine Guerrilla Setups.

Requirements The security exhibits a green daily bar. (Generally the wider the better, and closing near the high is better.) With the stock having moved up and closing near the high an opportunity might be in place for a reversal.

Trigger The day after the green bar, the stock gaps down under the entire prior green bar. In doing so, traders who were long in the stock feel trapped. This may possibly result in an imbalance between supply and demand pushing the stock lower. On the following day, Short the stock under that second day’s low with a stop over the prior green bar’s high.

Pristine Method Pattern Scans

19

The Bearish Mortgage Play

Targets The target area is generally the next area of daily support. So although the entry requirement is only a twobar setup with the third being the trigger, the wider the price void between the entry the support the better. The trade can last between two and ten days. The wider targets generally take longer and can be considered if the overall pattern encompassing the three bars appears to be a potential trend changing event.

Management General management approach is to trail stop losses behind the prior day’s high, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot highs in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Climactic volume on the prior wide range green bar is not required however it would enhance the setup implying more traders are caught on the wrong side. High volume on the day of the gap would imply the setup is more potent. This setup creates the highest level of surprise that a Pristine Guerrilla Pattern can create.

20

Pristine Method Pattern Scans

The Red Bar Ignored Play

The Red Bar Ignored Play General The Red Bar Ignored Play is a bullish guerrilla setup. It is a guerrilla setup based on two bars with the trigger on the third bar. Guerrilla setups often are not trend following setups but rather setups that rely on some form of surprise or reversal. Often they start new trends however sometimes they merely serve to reverse a move on a short two to ten day timeframe.

Requirements The security exhibits a red bar. The closer the bar closes to the low of the day the better.

Trigger The day after, the stock must engulf the prior red bar. In doing so, those traders who were shorting the stock feel trapped short or if they were prior longs who had sold out, they might feel as if they should reverse their recent wrong decision to have sold the stock and are compelled to buy the stock back. The more the red bar is ignored and the further up the prior red bar the move goes the more bullish. This may possibly result in an imbalance between supply and demand pushing the stock higher. On the following day, Buy the stock over the high of the second day, with a stop under the low of the prior day.

Pristine Method Pattern Scans

21

The Red Bar Ignored Play

Targets The target area is generally the next area of daily resistance. So although the entry requirement is only a two-bar setup with the third being the trigger, the wider the price void between the entry the resistance the better. The trade can last between two and ten days. The wider targets generally take longer and can be considered if the overall pattern encompassing the two bars appears to be a potential trend changing event.

Management General management approach is to trail stop losses behind the prior day’s low, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Climactic volume on the prior red bar is an enhancement. High volume on the day of the reversal would imply the setup is more potent although this setup creates a fairly high level of surprise. The deeper the stock moves up into the prior bar the better the setup should be. Although this might seem counterintuitive, as one would have to pay a higher price for the stock the reason is simply that there should be more traders surprised by the larger move.

22

Pristine Method Pattern Scans

The Green Bar Ignored Play

The Green Bar Ignored Play General The Green Bar Ignored Play is a bearish guerrilla setup. It is a guerrilla setup based on two bars with the trigger on the third bar. Guerrilla setups often are not trend following setups but rather setups that rely on some form of surprise or reversal. Often they start new trends however sometimes they merely serve to reverse a move on a short two to ten day timeframe.

Requirements The security exhibits a green bar. The closer the bar closes to the high of the day the better.

Trigger The day after, the stock must engulf the prior green bar. In doing so, those traders who were long in the stock feel trapped long and are compelled to sell the stock. The more the green bar is ignored and the further down the prior green bar the move goes the more bearish. This may possibly result in an imbalance between supply and demand pushing the stock lower. On the following day, Short the stock under the low of the second day, with a stop over the high of the prior day.

Pristine Method Pattern Scans

23

The Green Bar Ignored Play

Targets The target area is generally the next area of daily support. So although the entry requirement is only a twobar setup with the third being the trigger, the wider the price void between the entry the support the better. The trade can last between two and ten days. The wider targets generally take longer and can be considered if the overall pattern encompassing the two bars appears to be a potential trend changing event.

Management General management approach is to trail stop losses behind the prior day’s high, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot highs in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Climactic volume on the prior wide range green bar is a big plus. High volume on the day of the reversal would imply the setup is more potent although this setup creates a fairly high level of surprise. The deeper the stock moves down into the prior wide range bar the better the setup should be. Although this might seem counterintuitive, as one would have to short at a lower price the reason is simply that there should be more traders surprised.

24

Pristine Method Pattern Scans

The Pristine Basing Setup

The Pristine Basing Setup General The Pristine Basing Setup is a scan which searches for stocks whose daily charts are moving in sideways consolidations. Pristine uses several of these terms interchangeably. Consolidations and bases are generally corrections through time. Thus, when a stock goes sideways for a period of days it is generally expected to eventually continue in the direction it had been going. A base itself is defined by a series of approximately equal pivot highs and pivot lows. These points imply areas of temporary support and resistance. A breach of these areas signals a breach of support or resistance and can be traded accordingly.

Requirements The daily pattern must be exhibiting a fairly narrow range of approximately equal pivot highs and equal pivot lows. The pattern should be narrow enough to be reflective of a consolidation but not so narrow that it appears that there is little or no interest in the stock in either direction. (That very, very narrow condition is otherwise known as flat-lining.) Essentially, it should be making pivot highs and lows within the base.

Pristine Method Pattern Scans

25

The Pristine Basing Setup

Triggers On the day of the trigger the stock breaks out of/down from the base closing above/below the recent consolidation area. On the following day, buy the stock above the high of the breakout bar or short below the low of the breakdown bar as the case may be. Again, the more successful trades will be the ones that break in the direction the stock had already been going before the base.

Targets The target area is generally the prior pivot support/resistance in the next higher timeframe (weekly) as the case may be however in trending markets you could consider taking a portion of your gains at the initial target and looking for further gains with the remaining portion of the position.

Management General management approach is to trail stop losses behind the prior day’s high/low, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot highs/lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

26

Pristine Method Pattern Scans

The Above Average Volume Setup

The Above Average Volume Setup General The Above Average Volume Setup is intended to find stocks whose recent daily volume has increased substantially in relation to recent days. The general concept is this: When a stock makes a certain pattern, if the volume increases substantially as that pattern is being made, the pattern might have more significance, and thus might exhibit more follow through. When a stock has no particular pattern the recent spate of much higher than average volume might tip one off that a new move is starting. When a stock has been moving in one direction for some time, the coincident increase in volume might signify that a turn is near. Thus, this scan flags stocks with the volume increases. You then must analyze the price pattern to determine whether the high volume might be enhancing an existing move, starting a new move or ending a move.

Requirements The current day’s volume must be approximately two times the recent daily average volume. When this occurs on a given daily bar the stock will present the signal. From there, you analyze the stock to determine whether it fits any of the categories described above and possibly whether it is making a pattern specifically of interest to you.

Pristine Method Pattern Scans

27

The Above Average Volume Setup

Triggers Condition1. If the high volume occurs on the trigger of a pattern that you are familiar with, you will use the same entry, management, and exit strategies that he or she might use for trading the underlying pattern. Condition2. If the high volume occurs in an area which appears to be potentially ending a move, (for example, five days up and then the stock exhibits a topping tail on above average volume) . This could be a sign that the move is coming to an end and one would use the low of the prior bar to either exit a long or possibly even open a short (with a stop over the prior high) provided the price pattern offered a significant void and a worthwhile risk reward. Condition3. If the high volume occurs in an area which appears to be potentially starting a move, (for example, the stock has been basing sideways for a number of days and then breaks out on above average volume). This could be a sign that a new move is at hand and one would use the high of the prior bar to either exit a short or even open a new long (or the low of the prior bar to do the reverse) provided the price pattern offered a significant void and a worthwhile risk reward.

Targets The target area is generally the prior pivot high/low as the case may be however, in trending markets you could consider taking a portion of your gains at the initial target and looking for even larger gains with the remaining portion of the position.

28

Pristine Method Pattern Scans

The Above Average Volume Setup

Management General management approach is to trail stop losses behind the prior day’s high/low, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot highs/lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Pristine Method Pattern Scans

29

The Bullish Changing of the Guard Setup

The Bullish Changing of the Guard Setup General The Bullish Changing of the Guard Setup is a trend following strategy for the most part, although occasionally it will find interesting climactic setups. The concept is that the stock has moved down for a number of days in each case making either red bars or lower highs. After a number of such days the stock makes a green bar. Pristine refers to this bar as a Changing of the Guard. It implies that after some period of time the stock may be about to reverse.

Requirements After a number of days down, the stock must exhibit a green bar. The green bar, following a number of red ones implies a possible reversal.

Triggers On the day after the Changing of the Guard, Buy when the stock trades above the prior day’s high with a stop loss under either the current day’s or prior day’s low, (whichever is deemed more effective based on the amount of protection, the risk reward ratio alternatives and the general comparison of both those choices based on these two variables).

30

Pristine Method Pattern Scans

The Bullish Changing of the Guard Setup

Targets The target area is generally the prior pivot high however, in trending markets you could consider taking a portion of your gains at the initial target and looking for new highs with the remaining position. (In flatter markets you might look to an interim area based on retracement levels to take all or partial profits.) Retracement theory is discussed further in the Trading the Pristine Method Part II course.

Management General management approach is to trail stop losses behind the prior day’s low, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Pristine Method Pattern Scans

31

The Bullish Bottoming Tail Setup

The Bullish Bottoming Tail Setup General The Bullish Bottoming Tail Setup is a trend following strategy for the most part, although occasionally it will find interesting climactic setups. The concept is that the stock has moved down for a number of days in each case making either red bars or lower highs. After a number of such days the stock makes a Bottoming Tail. This implies that after some period of time the stock may be about to reverse as the bottoming tail is possibly a first sign of slowing momentum to the downside. (Inside the bottoming tail, somewhat of a reversal has gone on in a smaller timeframe.)

Requirements After a number of days down, the stock must exhibit a bottoming tail. This bar, following a number of red ones implies a possible reversal is at hand since the momentum to the downside might be slowing and a reversal has taken place on a smaller timeframe.

Triggers On the day after the Bottoming Tail, buy when the stock trades above the prior day’s low with a stop loss under either the current day’s or prior day’s low, whichever is deemed more effective based on the amount of protection, the risk reward ratio alternatives and the general comparison of both those choices based on these two variables.

32

Pristine Method Pattern Scans

The Bullish Bottoming Tail Setup

Targets The target area is generally the prior pivot high however, in trending markets you could consider taking a portion of your gains at the initial target and looking for new highs with the remaining position. (In flatter markets you might look to an interim area based on retracement levels to take all or partial profits.) Retracement theory is discussed further in the Trading the Pristine Method Part II course.

Management General management approach is to trail stop losses behind the prior day’s high, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Pristine Method Pattern Scans

33

The Bearish Changing of the Guard Setup

The Bearish Changing of the Guard Setup General The Bearish Changing of the Guard Setup is a trend following strategy for the most part, although occasionally it will find interesting climactic setups. The concept is that the stock has moved up for a number of days in each case making either green bars or higher lows. After a number of such days the stock makes a red bar. Pristine refers to this bar as a Changing of the Guard. It implies that after some period of time the stock may be about to reverse.

Requirements After a number of days up, the stock must exhibit a red bar. The red bar, following a number of green ones implies a possible reversal.

Triggers On the day after the Changing of the Guard, Short when the stock trades under the prior day’s low with a stop loss above either the current day’s or prior day’s high, (whichever is deemed more effective based on the amount of protection, the risk-reward ratio alternatives and the general comparison of both those choices based on these two variables).

34

Pristine Method Pattern Scans

The Bearish Changing of the Guard Setup

Targets The target area is generally the prior pivot low however, in trending markets you could consider taking a portion of your gains at the initial target and looking for new lows with the remaining position. (In flatter markets you might look to an interim area based on retracement levels to take all or partial profits.) Retracement theory is discussed further in the Trading the Pristine Method Part II course.

Management General management approach is to trail stop losses behind the prior day’s high, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot highs in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Pristine Method Pattern Scans

35

The Bearish Topping Tail Setup

The Bearish Topping Tail Setup General The Bearish Topping Tail Setup is a trend-following strategy for the most part, although occasionally it will find interesting climactic setups. The concept is that the stock has moved up for a number of days in each case making either green bars or higher lows. After a number of such days the stock makes a Topping Tail. This implies that after some period of time the stock may be about to reverse as the topping tail is possibly a first sign of slowing momentum to the upside. (Inside the topping tail, somewhat of a reversal has gone on in a smaller timeframe.)

Requirements After a number of days up, the stock must exhibit a topping tail. This bar, following a number of red ones implies a possible reversal is at hand since the momentum to the upside might be slowing and a reversal has taken place on a smaller timeframe.

Triggers On the day after the topping tail, short when the stock trades below the prior day’s low with a stop loss over either the current day’s or prior day’s high, whichever is deemed more effective based on the amount of protection, the risk reward ratio alternatives and the general comparison of both those choices based on these two variables.

36

Pristine Method Pattern Scans

The Bearish Topping Tail Setup

Targets The target area is generally the prior pivot low however, in trending markets you could consider taking a portion of your gains at the initial target and looking for new lows with the remaining position. (In flatter markets you might look to an interim area based on retracement levels to take all or partial profits.) Retracement theory is discussed further in the Trading the Pristine Method Part II course.

Management General management approach is to trail stop losses behind the prior day’s high, and considering additional protective measures once the stock is significantly on the way to the target.

Alternative Management Another form of management takes shape from using pivot highs in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Pristine Method Pattern Scans

37

The Climactic Buy Setup

The Climactic Buy Setup General The Climactic Buy Setup is a “counter-trend” swingtrading setup. It was created to enhance your ability spot reversals from oversold conditions where odds are favorable for a move back in the opposite direction (commonly referred to as a retracement). It can be used in all types of markets. If the entire market has sold off sharply one may find quite a number of such setups. Or it can be used on a case by case basis where individual stocks have climaxed regardless of the market environment, due to factors unique to that stock.

Requirements The security had been in a downtrend on the daily chart. This is evidenced by the Pristine Trend Indicator’s red crosshatching. The stock sells off creating five or more daily red bars. Ideally the bars will not overlap and will show a fluid move lower, with the bars widening creating a pattern that appears extended and may be evidenced as such by the distance from the declining 20MA. When you see this pattern, you can then set an alarm for either of the following two conditions as a potential entry for the following day.

38

Pristine Method Pattern Scans

The Climactic Buy Setup

Triggers Condition1. The stock moves up and breaches the prior day’s high. In this case you enters a long position with a stop loss under the current day’s low or the prior day’s low, whichever is lower (A general assessment as to the risk reward of the two alternatives may be used to determine which is preferable to you on a case by case basis.) Condition2. For those stocks whose prior day’s bar is a wide range red bar, (or for those stocks which gap up the following morning), you can consider marking off the 30 minute high, and upon subsequent breach of the 30 minute high, enters a long position with a stop under the current bar’s low. Alternate tactics are taught in Pristine’s seminars.

Targets The target area is generally some percentage retracement of the most recent move, such as 30 to 50%, however, in very strong markets you could consider taking a portion of your gains at the initial target and looking for a full retracement. Alternate interim targets can be gleaned from reviewing the next lower timeframe for areas of consolidation which may have occurred on the way down which could provide resistance on the way back up.

Management General management approach is to trail stop losses behind the prior day’s low, and considering additional protective measures once the stock is significantly on the way to the target.

Pristine Method Pattern Scans

39

The Climactic Buy Setup

Alternative Management Another form of management takes shape from using pivot lows in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Often as the climactic condition arises the stock subsequently exhibits one or several narrow range bars or bottoming tails. Often the selloff begins to reverse in an area of Major support. The down move may also end on above average volume (climactic volume). These all serve as tools that you can use to enhance your choice of which setups to actually trade.

40

Pristine Method Pattern Scans

The Climactic Sell Setup

The Climactic Sell Setup General The Climactic Sell Setup is a “counter-trend” swing trading setup. It was created to enhance your ability spot reversals from overbought conditions where odds are favorable for a move back in the opposite direction (commonly referred to as a retracement). It can be used in all types of markets. If the entire market has rallied hard one may find quite a number of such setups. Or it can be used on a case by case basis where individual stocks have climaxed regardless of the market environment, due to factors unique to that stock.

Requirements The security had been in an uptrend on the daily chart. This is evidenced by the Pristine Trend Indicator’s green crosshatching. The stock rallies creating five or more daily green bars. Ideally the bars will not overlap and will show a fluid move higher, with the bars widening creating a pattern that appears extended and may be evidenced as such by the distance from the rising 20MA. When you see this pattern, you can then set an alarm for either of the following two conditions as a potential entry for the following day.

Pristine Method Pattern Scans

41

The Climactic Sell Setup

Triggers Condition1. The stock moves down and breaches the prior day’s low. In this case you enter a short position with a stop loss over the current day’s high or the prior day’s high, whichever is higher (A general assessment as to the risk reward of the two alternatives may be used to determine which is preferable to you on a case by case basis.) Condition2. For those stocks whose prior day’s bar is a wide range green bar, (or for those stocks which gap down the following morning), you can consider marking off the 30 minute low, and upon subsequent breach of the 30 minute low, enters a short position with a stop over the current bar’s high. Alternate tactics are taught in Pristine’s seminars.

Targets The target area is generally some percentage retracement of the most recent move, such as 30% to 50%, however, in very weak markets you could consider taking a portion of your gains at the initial target and looking for a full retracement. Alternate interim targets can be gleaned from reviewing the next lower timeframe for areas of consolidation which may have occurred on the way up which could provide support on the way back up.

Management General management approach is to trail stop losses behind the prior day’s high, and considering additional protective measures once the stock is significantly on the way to the target.

42

Pristine Method Pattern Scans

The Climactic Sell Setup

Alternative Management Another form of management takes shape from using pivot highs in a lower timeframe. This advanced concept is discussed in the advanced Trading the Pristine Method courses.

Enhancements to the Setup Often as the climactic condition arises the stock subsequently exhibits one or several narrow range bars or topping tails. Often the climax begins to reverse in an area of major resistance. The up move may also end on above average volume (climactic volume). These all serve as tools that you can use to enhance your choice of which setups to actually trade.

Pristine Method Pattern Scans

43

Using Pristine Method Pattern Scans using The Explorer™

Using Pristine Method Pattern Scans using The Explorer™ How to find patterns: 1. With MetaStock open, select Tools > The Explorer. 2. Scroll down to the explorations that start with PM–. 3. Select your Exploration and click Explore. To add securities to your scan: a. Select Add Securities. b. Add the securities you would like to include in your scan.

To select a whole folder for exploration: a. Select Tools> Select all. b. Click Open.

4. When you are done selecting securities click OK. 5. When your exploration has run, click View Reports.

44

Pristine Method Pattern Scans

Understanding Pristine Method Pattern Scan reports in The Explorer™

Understanding Pristine Method Pattern Scan reports in The Explorer™ From the reports screen you will see a list of only the explorations that met the criteria for the selected scan. You may sort columns by clicking on them. • All securities with a confirmed Buy will have a 1 in the Buy column. • Securities that are currently Bullish according to the Pristine Trend Indicator will have a 1 in the Bullish column. • Securities that are currently Bearish according the Pristine Trend Indicator will have a 1 in the Bearish column. • All securities that have a 1 under Setup will have a buy condition for the next day. If you want to monitor this condition, you should open the chart and attach the expert to see at what price you should look to buy or sell the security.

Pristine Method Pattern Scans

45

Using Expert Advisors™ with Pristine Method Pattern Scans

Using Expert Advisors™ with Pristine Method Pattern Scans To Attach an Expert Advisor™ to an open chart: 1. With MetaStock open, select Tools > Expert Advisor. 2. Scroll down to the preferred scan (all scans start with PM –). 3. Highlight the scan you’d like to pick and click Attach. 4. Click Close. To view the Expert Commentary: 1. Right-click on any empty part of the chart. 2. Select Expert Advisor > Commentary.

46

Pristine Method Pattern Scans

Understanding Expert Advisors™ with Pristine Method Pattern Scans

Understanding Expert Advisors™ with Pristine Method Pattern Scans

In the Pristine Method Pattern Scans: • Blue arrows denote setup bars • Green up arrows denote Buy opportunities • Red down arrows denote short opportunities • All stop signs denote the end of an opportunity. On the right hand side of the chart above you’ll see a commentary bar. Commentary will be calculated on the last bar of a chart. You can move commentary by using the arrow keys above the commentary and by clicking on the chart. The day the commentary is currently evaluating will be denoted by a black triangle on the chart.

Pristine Method Pattern Scans

47

About Pristine

About Pristine Established in 1994, Pristine.com, a division of Pristine Capital Holdings, Inc., provides insight, intelligence, and education for the self-directed trader. Our combination of live seminars and online services guide both new and experienced traders to a more intuitive understanding of the markets. From a modest beginning as a daily fax sheet outlining explanations of the day's market activity, Pristine.com has grown to become one of the world's largest and most sophisticated online educational services for active, self-directed traders with over 60,000 subscribers to its daily advisory services and over 400 multi-language seminars conducted each year around the globe. The aim of Pristine.com is to educate individuals interested in self-directed trading and to provide trading ideas for those already experienced in the markets. The Pristine Method® includes a candid explanation of the psychological challenges of day and swing trading. Pristine.com also differentiates itself by not just teaching what to trade, but when and why to trade. Ultimately, individuals who participate in the complete Pristine educational system are better equipped to understand the markets and sufficiently prepared to trade independently. Pristine.com offers a series of educational seminars around the country, as well as an array of real-time, daily, weekly, and monthly services. For more information on the Pristine Method visit www.pristine.com/seminars

48

Pristine Method Pattern Scans

About Greg Capra

About Greg Capra Greg Capra is President and CEO of Pristine Capital Holdings, Inc., the nation's leading online educational service for active, self-directed traders. He has been a day and swing trader for more than 15 years. Back in the early 1990s he found a way to collect the intra-day stock quotes coming into his computer and store them into a program meant for commodities. For those interested, this program was called SuperTic, which was then upgraded to what was Metastock’s intra-day software at the time. This was years before intra-day stock charts were available to traders and even retail brokers. These were the days when institutions had all the advantages and the playing field was far from the level one of today. But times were about to change. Of course, the level of intraday data available today has come light years from that time. This was a time when a heavy rain storm could block the data feed from Data Broadcasting, now known as eSignal to his satellite. While the trading tools were crude in those early years, it was the start of a time that was to become a new profession. What Mr. Capra taught himself in those early years lead to the decision to form what was to become the nation’s leading educational firm for self-directed traders. In time, execution systems that opened and closed orders at light speed became available. This allowed anyone with the desire to become a professional trader to compete on a level field with any institutional trader or hedge fund.

Pristine Method Pattern Scans

49

About Greg Capra Before founding Pristine in 1994, Mr. Capra ran a successful business for 15 years. Wanting to invest that money wisely, Mr. Capra became a voracious student of the market and became especially interested in the quantitative analysis of market movements.

50

Pristine Method Pattern Scans