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74

This next chart of CNET formed a very nice Three Drives pattem that yielded quite a reversal. Although the thmsts exceeded the 1.618, the pattem was very symmetrical in price and time.

7U 60 5U 40 30 20 10

BisCharts.com

CNET (CNET): DAILY BEARISH THREE DRIVES

Rpr - Jun

When you see such a clear pattem developing, you must think: "sell!" CNET formed a beautiful Three Drives that developed over a three-month period. In fact, each thmst was almost exactly one month in time, topping out at the beginning of each month. Although the 1.618 of each drive was exceeded, the pattem clearly indicated a top somewhere around 75. The 1.618 projection of the third drive was calculated at 73 7/16, and CNET reversed at 79 3/4.

The stock was up sharply the day that it hit this projection. However, the following day possessed an extremely bearish price bar. Such lack of continuation should signal a potential reversal at hand. The stock plummeted within days after the reversal.



Remember, in this pattern, the drives should occur at symmetrical time sequences. Although these time parameters might not be exact, if the thrusts are generally symmetrical the pattem is still valid. The symmetry of this pattem will indicate the completion of the third price move, and the trade set-up can be easily calculated.

Three Drives at a Major Fibonacci Projection

When a Three Drives pattem develops at or near price extremes -either an all-time low or high, it is very common to observe a major Fibonacci projection that converges in the same area of the third drive. These larger projections are very significant because they clarify the potential reversal zone.

Bullish Three Drives

At a Major Fibonacci Projection

bullish three drives at a major fibonacci projection: buy at 3!



When a bullish Three Drives pattem develops with a major Fibonacci projection, the potential reversal zone is more clearly defined. Since the third drive only possesses one projection, another harmonic calculation serves to provide greater evidence of the harmonic area.

After suffering a severe decline, Cendant completed a Three Drives pattem around 7. The three drives should be fairly clear and they do stick out at you. Also, each drive completes at the 1.618 of the previous price move. Although the time sequence between each drive is not exactly symmetrical, I believe that these thmsts are geometrically clear enough for this pattem to be valid.

CENDANT (CD): DAILY

BULLISH THREE DRIVES AT A MAJOR FIBONACCI PROJECTION

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iLh.Li

D98FI1 flMJ J fl SO HD99FI1



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