Ensign Map and Pesavento Patterns

Q:  I’m a recent subscriber to your software through Larry Pesavento.  I use Ensign Map and was wanting to know how I can tweak a chart with other indicators. I’ve looked at the Pensavento Pattern but I don’t really do much with Fibonacci since I’m not going in and out on an ETF throughout the day.  Is there another one or two technical indicators I should be using to predict where the market is going for the next day or two?

A:  Thank you for using Ensign. The Ensign Map, Pesavento Patterns and other tools are great tools and perhaps unique to Ensign.  Larry has been very helpful in getting tools like these in our software and then promoting them in the seminars he gives.  He uses these tools.

Use the Map with 2 minute charts, and refresh the chart’s data set to have at least 12,000 bars. Check the Maximum Bar setting and Resize Bar setting on the chart property form so the capacity is set to at least 15,000 bars. More is better. Maximum is 65530.

I encourage you to study the Fibonacci material and use the Pesavento Patterns as they are key to how Larry analyses the markets.  He is using the Map tool for time, the Fibonacci Levels for a price objective, and Pesavento Patterns for wave patterns. He is taking trades at the intersection of time and price and using risk money management principles to keep emotion out of the trade.

There is no tool that will predict. However the Map does give a suggestion based on statistics of the time when turns might happen, and Fibonacci Levels is a good tool for where turns will happen.  And I will add to the list the value of a simple trend line drawn under rising trends and above falling trends. Sometimes the simplest things like a trend line work better than all the complex math others use. 

Here is my list of greart articles to read. And read the articles linked to these articles.

Gann 2-Bar Swings

Choong: ‘The simplicity of Gann x-bar Swings as a trend line indicator works much better with products that trend such as the spot forex or futures currency in spotting 1~3 day/bar corrections. When the market is not trending (ie. going sideways) we see the swing line/counts dancing to the tune with 1 upswing, 1 downswing, 1,2 upswings, 1 downswing… back and forth. This is totally different from the percentage zigzag line because x-bar swings track price movement direction and market trends so closely.

(Click on any chart image to show enlarged).

Gann 2-bar Swings work extremely well with EUR.   Here is the EUR H2 5-min chart.

Once again, a big thank you for implementing Gann x-bar swings in Ensign Windows and Ensign 10.’

Fibonacci Levels on Log Scale

Q:  When I tick ‘log’ in chart properties, I get different scale numbers for the Fibonacci levels than I do when using ‘price’ scale.  That I expected.   However, when I change the height of the log chart, the Fibonacci numbers change slightly.  Why?

A:  The Fibonacci tool on a log scale is based on graphical distance, such as 50% of the wave’s vertical height.  When on the log scale, we have to reverse engineer a price for the pixel that is in the middle of the wave.  There is not a pixel for every possible price. We have to use a formula to calculate prices based on the scale range and the number of pixels in the range.  When the chart’s height changes, the number of pixels in the range changes which changes the result that is returned.

Take this example, which is simple.  Say the price interval is 10, and there are 3 pixels on the screen for this interval, one at the top, one at the bottom, and one in the middle. 10 divides by 2 intervals nicely to give a midpoint price calculation of 5.  Now increase the height to use 4 pixels.  One at the top, one at the bottom, and 2 in the middle. Now 10 is divided by 3 intervals. The pixels return prices of 3.3333 and 6.667. But there is no pixel to read that happens to fall on 5.

For a regular price scale, the calculation is based solely on price and returns the exact value of $5 in this example.  But for log scale, the program finds the pixel nearest the 50% distance and reverse engineers the pixel’s price which in this case would be 3.333 or 6.667.

Now this example is an extreme case of nearly no resolution with just 3 or 4 pixels. In actual use a chart has dozens of pixels vertically and the log scale will have a pixel very near the intended price.  But there is likely no pixel that is exactly and conveniently on the division point.

In summary, on regular price scale the calculated levels are the exact price. On the log scale, the pixel for where the line is placed computes a price for the pixel position.

ESPL: Creating ESPL DLLs

The Delphi used in this article is Embarcadero Delphi 2010.  Any compiler and language can be used to make a DLL as long as the output is in flat “C”-type format (eg. No Objects, Classes or Strings, being passed as parameters or returned).

Step 1:  Make the DLL in Delphi

Click File | New | Other | Dynamic Link Library

This is the code for a DLL named ESPL_DLL.

library ESPL_DLL;
const ESPL_NAME = ‘ESPL_DLL.DLL’;

{$R *.res}

function ESPL_Sum(AValue1: real; AValue2: real): real; stdcall;
begin
  result := AValue1 + AValue2;
end;

function ESPL_Max(AValue1: real; AValue2: real): real; stdcall;
begin
  if (AValue1 >= AValue2) then
    result := AValue1
  else
    result := AValue2;
end;

exports
ESPL_Sum,
ESPL_Max;

begin
end.

Step 2:  Make the ESPL Form

Here is the form in Ensign 10’s ESPL IDE, with 2 buttons and a memo component.

Step 3:  Add the source code

{$FORM TfrmMain, Main.sfm}

uses  Classes, Graphics, Controls, Forms, Dialogs, StdCtrls;

 

function ESPL_Sum(AValue1: real; AValue2: real): real; stdcall; external ‘ESPL_DLL.dll’;

function ESPL_Max(AValue1: real; AValue2: real): real; stdcall; external ‘ESPL_DLL.dll’;

procedure btnSumClick(Sender: TObject);
var rValue: real;
begin
 
rValue := ESPL_Sum(3.5, 7.2);
 
Memo1.Lines.Add(rValue);
end;

procedure btnMaxClick(Sender: TObject);
var rValue: real;
begin
  rValue := ESPL_Max(8.7, 10.1);
  Memo1.Lines.Add(rValue);
end;

procedure frmMainShow(Sender: TObject);
begin
  Memo1.Clear();
end;

begin
end;

Step 4:  Run the program script

  1. Click the ESPL Run button
  2. Click the Sum button
  3. Click the Max button

Transfer Ensign 10 to New Computer

Q: How do I transfer Ensign 10 onto a new computer?

A:  1. Copy the entire ENSIGN 10 folder from the old computer to the new computer.

2. Download and install Ensign 10 on the new computer from our website at: http://www.ensignsoftware.com/downloads.php

This will update the registry entries to the folder you copied over.

3.  Contact  billing@ensignsoftware.net  and report the new Ensign ID that shows on the Setup | Security form so that this computer can be authorized for your subscription to Ensign.

Market Trends from 2-Bar Swings

2-bar swings require 2 higher highs or 2 lower lows without an interrupting counter move.  They are an indication that the underlying trend may change or simply a correction swing (between 1-period and 3-period) and the trend will continue when price breaks the nearest peak or valley.  With more than 3 consecutive sets of swing periods, either up swings or down swings, a high probability trade change has evolved at least temporarily.

Trend Change Swings

Up Trend and Down Trend

Gann x-Bar Swings

Swing trading takes advantage of the tendency for prices to ebb and flow in the short-term, to move in directions against the trend, and to reestablish that trend again.  Wait for the counter trends to occur and then trade in the direction of the trend.

One of the simplest of Gann’s methodologies is the use of swing chart patterns as a study of market swings.  The construction of a swing chart results in what Gann called a trend line indicator.  Using the high and low for the period, whichever exceeds the previous period becomes the trend line indicator.  Market swings are the true reflection of price movement and that means we can all know that ‘Price tells the trend’.  It’s the simplest way to keep our mind focused on market direction at the beginning of a new swing and exiting at or near the end of that swing to await the development of a new swing trading opportunity.

The illustration shows a 2-bar swing concept.  A 2-bar swing chart measures swings only after the market has made two higher highs or two lower lows without an interrupting counter move.   A 3-bar swing chart requires three higher highs and three lower lows.

Swing Chart Rules

Gann swings are shown in Ensign using the Pesavento Patterns draw tool.   Go to the Pesavento Patterns property form and change the Study Mode to one of the 5 Gann selections.  Ensign can display 1-bar swings through 5-bar swings.

The Gann swings look like this 2-bar swing example.  The counts are shown using the colors selected for the Up Trend Marker and the Down Trend Marker.  The Pesavento Patterns, Support and Resistance levels, and Fibonacci levels can optionally be added to the swings.

Gann Swing Chart

Weekly Range on a Daily Chart

Q:  I want to overlay a weekly bar over the daily bars.  Any suggestions?

A:   This clever DYO that will show a weekly range on a daily bar chart.

On the first bar of each week, ie Monday, the DYO will look in the forward direction for the other bars in the week, find the Maximum High and Minimum Low, and plot these values. The key to this is the Offset used for the comparison. For example,  Line C compares the current bar’s high on the top row with Offset = 0 with the High on the 2nd row of the entry boxes where Offset = 1.  The +1 offset references tomorrow’s bar. High[2] is the High 2 bars in the future from the evaluation bar, and High[3] is 3 bars into the future.

Layering Charts in Ensign 10

Q:  In Ensign Windows I have large charts on top of each other and use CTRL/Tab keys to bring a chart to the forefront.  I don’t know how to expose a chart if it is hidden behind another Ensign 10.

A:  The CTRL/Tab feature is a function of the operating system, not Ensign, for MDI (multiple document interface) child windows.   That was lost in the redesign of Ensign 10. 

May I suggest that you take a look at using the Layer feature in Ensign 10 as an alternative. Put a large chart on each layer and then click on the layer buttons on the main ribbon to switch charts. This would handle up to 9 such charts.

The other suggestion is to stack the charts with the stack feature. Then you bring the chart to the surface using the buttons that show on the stack for the members. Most use the stack feature.

Open several charts, have them overlap each other, and click the Stack button on the main ribbon. This makes the stack. You can double click on the button on the stack to remove a chart from the stack. Or overlap the stack with another chart and click the stack button to add it to the stack.