Dragon pattern: how to identify and use it in Forex?

The “Dragon” pattern is quite common in the Forex market and other financial markets and allows traders who are familiar with graphical Analysis to successfully obtain the desired profit thanks to knowledge of all the intricacies of constructing and further developing a graphical model.

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In forex technical analysis, pattern recognition is defined as the process by which traders “recognize current events while identifying certain predictable price patterns.”

Although Forex patterns very rarely repeat at the same trading levels or in the same time intervals, there are still patterns that repeat in certain forms and certain sequences.

The ability to recognize these types of patterns and trade according to certain rules on these graphic models will help you become a successful Forex trader. At the same time, successful recognition of a graphical model and trading on it must consist of an initial starting point and basic rules on the trading methodology. In this Forex strategy, we will look at one of the patterns, which is called “Dragon”, and also justify the basic rules of trading on this Forex pattern.

The Forex market very rarely moves from a bearish to a bullish state and vice versa (the exceptions are V-bottoms and V-tops), without a series of certain kinds of price trends in which the formed support and resistance levels are tested. The “dragon” pattern is also based on these kinds of turning points and provides us with a good method for concluding transactions on them.

The Dragon pattern can be found on all time intervals and on all currency pairs.

Description of the Graphic Model “Dragon”:

The Dragon pattern is very similar to the W pattern or the double bottom pattern, but it has several distinctive rules and targets. Accordingly, inverted “dragon” patterns are similar to the M pattern, or “Double Top”.

"Dragons" very often appear on the market near the market bottoms. Like double bottoms, dragon patterns are excellent opportunities to enter a trade with a low level of risk relative to the potential profit potential.

The “Dragon” pattern begins its formation from the “head”, after which the price on the chart decreases and thereby forms the 2nd “dragon’s paw”. Very often the difference between these 2 paws is 5 -10%. On the 2nd formed leg, a signal for a market reversal appears - a reversal bar or divergence with oscillators (for example MACD, RSI, Stochastic, etc.)

An increase in the volume of transactions that follows a price reversal in the market is also a good sign of a reversal. When forming a pattern, we can draw a trend line from the dragon's head to its hump.

As soon as the price closes above the trend line, and we thereby receive graphical confirmation (or receive confirmation on the oscillators described above), then this is therefore a trend reversal signal. The 2nd confirmation of this Forex pattern is the closing of the price above the level of the formed “hump”, which is a swing high between the two resulting “dragon legs”.

Picture 1

What is the power of pearls? Dragon of Luck

And yet, while communicating with Chinese women, I noticed that they rarely wear the pearls they praise. At least in everyday life, well, except on holidays.

A light of understanding was shed on the situation by my Chinese friend Nancy, a young energetic businesswoman. We bought pearls together more than once, but I never saw her wear them. It turns out that the main thing is to have pearls! According to popular belief, it is a guarantee of fidelity in love, strengthens marriage bonds, and helps business people make the right choice.

And if we turn to the legend, it turns out that even one pearl can bring good luck.

An ancient Chinese legend tells of a poor boy who cut grass every day to feed his pets. He found a field with wonderful green grass and was surprised to see that the next day the mown field was overgrown more densely than before. And here, among the lush greenery, the boy found a sparkling pearl. He gave the wonderful find to his mother, who hid it in a half-empty jar of rice. Now the grass on the mown field no longer grew so quickly, but the jug was filled to the brim!

The boy and his mother realized that the pearls were magical and put them in a small bag with their only wealth - a few gold coins. From that time on, the coins did not run out, the peasants became rich and began to help their neighbors, who supported them in days of poverty.

But greed prompted two envious people to steal the pearls. In an effort to save his only treasure, the boy hastily swallowed it. The magic pearl began to burn him from the inside and caused terrible thirst. He couldn't satisfy it. The little peasant drank all the water in the house in the village. He couldn't douse the fire inside. And then he drank the river. And he turned into a dragon. Now, when there is a drought in the country, the dragon boy brings abundant rains, giving the villagers a good harvest.

Perhaps, thanks to this legend, the ancient sages saw pearls as the personification of thunder, the sun, and the moon. They believed that the moon, pearls, dragons and snakes were inextricably linked. Many dragons lived in the sea and loved to collect pearls, since each pearl represented ancient knowledge of wisdom. The eastern dragon is a divine mythical creature and a powerful symbol of good luck. This benevolent being binds heaven and earth, protecting mortals by keeping the balance between heaven and earth. He is a symbol of wealth and prosperity. The dragon is seen as powerful and wise, gentle and cruel, power and strength. The dragon is the patron of enlightenment, has the heart of a mother with its nurturing feminine quality and the power of fire. And at the same time, Chinese dragons receive strength from the “pearls of wisdom.”

Another legend says that pearls are the tears of the moon. These tears were swallowed by oysters, and then they became talismans for those who needed their help. The power of the moon gave beauty and prosperity.

Flawless by nature and requiring no craftsmanship to perfect their beauty, pearls were undoubtedly the first jewels known to mankind. Pearls, whether white, black, coral or pink, are on par with diamonds, emeralds and sapphires in their value. How gorgeous are the different shades of white, cream and pink!

Since ancient times, pearls have been given special mystical properties: the owner of the pearl was protected by higher powers, he was granted prosperity, longevity, beauty and health. There is interesting evidence about the close connection between pearls and their owner: pearls become dull when the wearer falls ill.

A string of pearls or at least a few beads on clothes or in a hairstyle determined the status of the owner. Well, those who could afford it experienced the healing effects of pearls from the inside, using tinctures made from crushed pearls. This jewel was considered a means to restore youth. And now, by the way, masks with pearl extract are very popular.

Pearls worn as beads make a woman more feminine and sexy. This is the best talisman for women, as it is associated with the moon and water - the main symbols of feminine nature. Therefore, dear women, wear this wonderful jewelry. And if you don’t like it (anything can happen), keep at least one pearl in your jewelry or money box. She will attract wealth and family happiness to you.

Tags: pearls, legends, China, traditions

Structure of the Dragon pattern:

A - "Dragon's Head" B - "First Dragon's Leg" C - "Dragon's Hump" (should be within 0.38 - 0.5 from AB) D - "Second Dragon's Leg" (tends to be 0.618 or 1.27 from AB) E - Breakdown formed trend line (signal to open a trading position to buy) F - First profit target - 1.27 CD G - Second profit target - 0.886 - 1.0 ВС Н - Third profit target - 1.38 AB I - Safety Stop Loss must be placed at a few ticks below the lowest minimum of the dragon's two legs.

Figure 2

In Figure 3, you see the Dragon pattern on the 30-minute price chart (M30) of the Dow E-mini futures. On January 3, 2007, the market price formed the “Dragon's Head”. After this, the price fell until January 8, until the first Dragon leg was formed. On January 8, an attempt was made to recover to the price level of 12520. After this, we can draw a trend line, connecting the top of the Dragon's head and the top of the first leg of the Dragon. And on January 10, the second leg of the Dragon was formed, the price on the chart rolled back from the top of the Dragon’s hump to the level of 12420. The final confirmation of the formation of the “Dragon” pattern was the closing of the market price above the formed trend line near the level of 12500.

1. Open a trading position to buy at a price of 12520 when the price closes above the high of the breakout bar. 2. The profit target is the 1st swing high preceding the Dragon leg (1) at the level of 12570 and the “dragon head” zone at the level of 12640. 3. Place a safety stop loss order under the lowest low of the 2 legs formed near the level 12410.

Figure 3

Pattern innovations

Again, if experienced traders study the above, they will notice that for now the entry point from the paws and the breakout of the back is similar to how classic reversal patterns of technical analysis are worked out. So what's new? What did the author manage to offer that dramatically increased the accuracy of successful signals?

To do this, you need to remember, as we said, that for the purity of the pattern the author began to rely on Fibonacci levels. The main thing here is the moment concerning the back. The fact is that from a decline it should rise to the range between levels 38.2 and 50 on the Fibo line. To make it clearer, look at the screenshot below.

In this case, the hind legs should be located between 61.8 and 1.27 Fibonacci, if you stretch the grid from the front legs to the back of the Dragon. These points made the pattern extremely popular, since in cases where these parameters were not met, a reversal usually did not occur. On the contrary, when the price observed the indicated ratios in its movement, the probability of a reversal was 70-80%. Considering that the potential for movement when entering with a short stop is very large, such a high percentage of accurate signals makes the strategy of using the Dragon pattern very successful.

Inverted Dragon Pattern

This pattern resembles a “double top”. Trading conditions are the same as for the direct dragon pattern. The “dragon hump” is very often formed at a distance of 38-50% from the “dragon’s head” to its 1st leg. Closing a candle under the resulting trend line generates a signal to conclude a sell position.

The closing of the candle below the level of the formed hump once again confirms the formation of the “Dragon” pattern and gives another signal to conclude a sell transaction.

Figure 4.

1. You should open a trading position to sell under the formed trend line. 2. The profit target is the swing low that precedes the first dragon leg. 3. You should place a safety stop loss order above the high of the second leg of the dragon.

Conclusions on the Forex “Dragon” pattern:

Dragon patterns are a variation of 2 tops and double bottoms. These Forex patterns allow the trader to find important turning points in the foreign exchange market and predict trend transitions from one to the opposite.

Although dragon graphic patterns are quite rare on daily and weekly price charts, they can very often be found on smaller time intervals, and trading these patterns gives a great chance of making a profitable trade.

You can also add additional Forex indicators for yourself for greater reliability when trading on it.

The Legend of the Birth of Lake Xihu

Xihu西湖, which means “West Lake”, is considered one of the most beautiful lakes in China Numerous legends, stories, and traditions are associated with the lake. Poets sang it in their poems, artists depicted it on their canvases.

One ancient Chinese legend tells of the appearance of Lake Xihu and the beautiful love between the Dragon (龙, lóng, symbol of the masculine principle) and the Phoenix (凤凰, fènghuáng, the feminine principle). This plot is often found in Chinese paintings: Dragon, Phoenix and pearl.

Willows of Lake Xihu

Once upon a time, in a stone cave east of the Heavenly River, there lived a snow-white Jade Dragon. And in the large forest to the west of the Heavenly River there is a colorful Golden Phoenix. The Jade Dragon and the Golden Phoenix were neighbors. Every day from morning to evening they went about their business. One fine day, the Jade Dragon and the Golden Phoenix reached an amazing island, where they found a large stone shimmering with all the colors of the rainbow. He captivated the eyes of the Dragon and Phoenix, and they decided to carve a pearl out of him. The Jade Dragon had already sharpened its claws, and the Golden Phoenix had broken its beak, but day after day they worked to grind out the pearl. Their work was not in vain, and years later they carved a perfectly smooth pearl from the stone.

But it seemed to them that the pearl lacked shine. The Golden Phoenix from the Mountain of the Celestials brought dew in its beak, the Jade Dragon from the bottom of the Heavenly River took out the purest spring water. They sprinkled the pearl with dew and spring water, and immediately the pearl shone brightly. Her radiance touched the Jade Dragon and the Golden Phoenix, and the Jade Dragon turned into a handsome young man, and the Golden Phoenix into a beautiful girl. Love flared up between them for each other and for their creation - a shining pearl. They settled on an island in the middle of the Heavenly River and kept their pearl.

This pearl was magical: under its radiance the forests turned green, flowers bloomed, and crops ripened. And one day her radiance reached the eyes of Sivanmu herself - the Mother Empress of the West. With all her heart, Sivanmu desired to possess the beautiful pearl. She sent her confidant to steal the pearl, and when the Jade Dragon and Golden Phoenix were fast asleep, he took the pearl. Sivanmu hid the pearl in a golden box in the farthest chambers, locked with nine doors with nine locks, and kept the keys with her at all times.

Bridge on Lake Xihu

In the morning, the Jade Dragon and Golden Phoenix did not find their beautiful pearl. They searched the whole house, the Jade Dragon descended to the very bottom of the Heavenly River, the Golden Phoenix climbed the Celestial Mountain, but they did not find their pearl anywhere. But they did not lose hope. One day, Sivanmu organized a grand celebration in her palace. All the celestials flocked to him. The most exquisite dishes and wonderful wines were on the tables. Sivanmu, drunk, turned to her guests: “Celestials! I have a beautiful pearl hidden, and today I will show it to you. You won’t find anything like it either on earth or in heaven!” And, taking a bunch of nine keys from her belt, she used them on nine locks of nine doors and, opening the box, laid out a sparkling pearl on a golden plate and carried it to show it to the guests.

The brilliance and splendor of the pearl blinded those present. The radiance emanating from her spread around. The Jade Dragon and the Golden Phoenix saw him. They rushed into the heavenly palaces, and, stepping forward, exclaimed: “This is our pearl!” Sivanmu became angry and shouted: “Lies! All the treasures of the world must belong to me, for I am the mother of the Heavenly Lord himself!” Then the Dragon and Phoenix told how they grinded the pearl day after day, year after year, how they rubbed their claws and beak into blood. But Sivanmu called the guards and hurried to hide the pearl. The Jade Dragon, Golden Phoenix and Sivanmu grabbed the golden plate tightly, each pulling it towards themselves. The beautiful pearl swung and rolled off the plate and flew down to the ground. Sivanma started wailing, unable to do anything, the guests were taken aback, the guards froze. And the Jade Dragon and Golden Phoenix rushed down for their beloved pearl. In flight, the young man turned back into a Dragon, and the girl into a Phoenix. So they flew, guarding the pearl.

Dragon, Phoenix and Pearl

But as soon as the pearl touched the ground, it turned into the transparent Western Lake. The Jade Dragon and the Golden Phoenix were unable to part with their precious pearl. Coiled up, the dragon turned into the Jade Dragon Mountain near the shore of the lake, and the Golden Phoenix turned into the Phoenix Mountain covered with emerald green. And since then, Jade Dragon Mountain and Phoenix Mountain have guarded the precious Xihu Lake. And in the folk song it is sung: “A clear pearl fell from Heaven to Xihu, the Dragon and Phoenix flew to the Qiantang River.”

Sunset on Lake Xihu

Article updated December 9, 2017

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Activation of the talisman

According to Feng Shui theory, there is a special ritual for activating the talisman, the essence of which is to “open the eyes” of the dragon. To do this, on the day of the dragon according to the Chinese calendar, in the time period between 7 and 9 a.m. (local time), using a brush and black paint, you need to put dots on the eyes of the dragon. During the ritual, the dragon must look east.

To put the dragon into the active phase, a special ritual is performed. For him you should choose a couple of minutes between 7 am and 9 am. “Hour of the Dragon” is what these two hours are called in Chinese mythology. To awaken, you should apply two small black dots with a brush to the eyes of the talisman so that its gaze is directed to the east.

The dragon symbol does not require mandatory recharge. Its powerful effect should be corrected with other symbols in the form of animals, as well as furniture or wooden decor. Place fresh flowers or paintings with a spring theme in the room.

Where to place a painting or figurine

The sacred animal has its own cardinal direction - east, element - air, and color - green. A green figurine is the best amulet. If you can’t place it in the east, then try to make the creature’s face point in this direction. If possible, place the symbol in the air flow to enhance its impact.

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Protection that no negative energy can penetrate is given by the symbol located to the left of the front door. Place a figurine or painting in the living room to protect your home from negativity. The talisman should be placed on a raised platform, but not higher than a person’s height. Wall shelves and beautiful floor stands are ideal.

To imbue the business sphere with the energy of success, place a dragon figurine in the Wealth or Career zone. These are southeast and north respectively. Choose a work office or desk for the symbol. Don't forget about protecting your office.

The image of a dragon as a family patron would be appropriate in the Family zone. In the east, this talisman works most actively; it gives well-being to the residents of the house and preserves their physical and mental health. But avoid placing an animal in the bedroom, its powerful energy will affect the quality of rest.

There is no place for a sacred animal in the bathroom, as all financial success will flow out of life. You should not place the symbol in the southern part of the house, in the Fire sector.

A figurine decorated with pearls is a talisman that protects against risky transactions, fulfills the wishes of its owner and gives him the gift of foresight. Most often, such figurines are made in the form of a dragon with such a stone in its mouth or in the form of a pearl in a shell.

The magical properties of this stone depend on the color, so figurines decorated with white pearls bestow their owner with freedom, black pearls with intelligence and foresight, orange with prosperity, and blue with happiness.

Types of figurines

In Feng Shui souvenir shops you can find various figurines decorated with pearls of various colors - such as:

dragon with a pearl in its mouth;
shell with pearl;
a dragon with a pearl in its paws;
a toad sitting on a pearl;
at least with a pearl in his hands.

This talisman brings success and good luck in business. This figurine, decorated with a pearl, is one of the most beloved symbols in Feng Shui. Mother of pearl stone symbolizes spiritual and material wealth. This symbol means that matter and spirit are inseparable. It is believed that a dragon without a pearl becomes angry and refuses to bring good luck to its owner.

A dragon figurine can be made of copper clay, but it is best to choose a yellowish pearl. It would be ideal if it is a sea figurine in the dragon’s mouth, but if you cannot purchase such a figurine, choose a dragon with an artificially cultivated pebble or a crystal pearl.

Shell with pearls

This figurine symbolizes wisdom and higher knowledge. It is better if it is a black or brown pearl, then its owner will always be able to make the right decision. It is preferable that the sink itself be faceted and made of glass. Then she will be able to pass negative energy through herself, transforming it into and evenly distributing it throughout the apartment.

It is desirable that such a figurine be of greenish tones; the material from which it is made does not play a special role. Then such a figurine will bring favorable changes, prosperity and kindness to the house. The pearl in the dragon's paws can be either natural or artificial.

This is perhaps one of the most common Feng Shui money talismans. It is better if the figurine itself is gold in color and made of metal or clay.

It is preferable if the pearl is yellowish-orange or green. Then the figurine will bring its owner a lot of money.

You can use such figurines carved from onyx or jade, and the toad can also sit on pearls made of semi-precious stone or glass.

Such a talisman is rarely found. This figurine will help not only in financial matters, but also in developing talents and accumulating spiritual wisdom. It would be good if Hotei was made of bronze, clay or stone chips.

However, the material from which the figurine is made is not particularly important, the main thing is that it is pleasant to its owner. It is desirable that Hotei has a natural pearl of white, golden or blue color in his hands. It can also be made of glass, mother-of-pearl, onyx or hematite. In any case, such a figurine will bring good luck to its owner.

Such a talisman is best placed in the living room or on the desktop, then it will definitely bring good luck in business and protect you from risky and rash actions. If we are talking about a dragon with a pearl in its mouth or paws, it is advisable to place the figurine on a pedestal or small stand.

Be sure to place the toad with its back to the door, and to attract money, it is advisable to place it in the far left corner of the desk. And Hotei can be placed in the glory sector, that is, in the southern zone of the apartment, then the figurine will bring its owner not only money, but also recognition.

The pearl in the shell is best identified in the Northeast, that is, in the knowledge sector. You can also find a place for it on the desktop or on the shelf above it.

Alexander, November 6, 2014.

Pearl is the only precious stone in the world that is not mined from the earth.

Then how are pearls formed? It occurs in mollusk shells. This occurs when foreign particles enter the sink. This could be sand, small fauna, and so on.

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All this can injure the body of the mollusk. To prevent this from happening, it begins to secrete a special substance. It is called nacre and is translated as mother of pearls.

This substance envelops the foreign body, smoothing out all sharp corners. This is how pearls are formed.

The longer it stays inside the shell, the larger its size will be, since the substance of the mollusk envelops it in layers, and it is released until the pearl leaves its home. This may happen when the diver retrieves it.

After this, the gemstone is delivered to the jewelers. They create jewelry from pearls, and even from photographs you can appreciate their beauty. Such products quickly sell out, not only due to their magnificence, but also due to the fact that pearls have healing and magical properties.