Symmetry is versatile, and it works on all time frames.
What do I mean by that? Well, to review, "symmetry" refers to the similarity or equality of price swings in the same direction. How a stock or index behaves against a price area that contains a number of symmetry projections -- what others may refer to as "measured moves" -- can tell you a lot.
Symmetry can identify key support or resistance areas. It can be used to determine if a trend is still intact. If a stock breaks through a symmetry cluster, it tells you to watch for a deeper correction at the very least.
Now, let's look at some intraday charts for some examples.
We'll start with a 78-minute chart in iShares Russell 2000 (IWM). In this example I ran the 100%, or symmetry, projection of the prior declines within the uptrend. I projected those prior declines from any new high seen in the stock.
This revealed a couple of things. First, you can see that it identified a support decision. The most recent intraday low, $115.28, was a test-and-hold of some of those prior projections. Since the price held above that symmetry projection, it also told you the bullish trend was still clearly intact. Notice the similarity among some of these prior swings. The ones that were very similar ranged between $1.91 and $2.22. That's what I call symmetry.
This support decision held up, and IWM so far seems to be heading towards target 1.
In this next example, a 30-minute chart of Apple (AAPL), I'll show you how I'm using symmetry in service of trailing a stop. Apple has been trading quite close to resistance lately, and many share-price moves terminate at extensions of prior swings, so I've suggested using a trailing stop here.
In this case, I looked at the largest declining swing within the uptrend that started on Oct. 15: $2.64. If you project this from any new, recent high in Apple, you'll see the stock has never declined by more than $2.64. So, if you're in this stock, I suggest a stop below the symmetry projection, which comes in at the $107.25 level. If Apple makes a new high I will run a new projection from that level and adjust accordingly. Typically you want to place a stop at least $0.50 below a projection.
Finally we come to a 30-minute chart of Qihoo (QIHU). Note how four of the prior price swings were very symmetrical, having amounted to anywhere from $4.34 to $4.56. In this case, using symmetry would have given you three separate support decisions -- and trades -- and all of these have held so far.
Following Qihoo's initial rally, though, this last setup has started to falter -- and I will back off the buy side if this symmetry is broken in the coming sessions. Also know that, if this symmetry is broken it votes for -- though does not guarantee -- at least a deeper downside correction and possibly more than that. The "possibly more" would include a potential full trend reversal.
Try out this strategy in the stocks and indices that you follow. You will be surprised how such a simple concept can be so powerful. Prove it to yourself!