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.

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.