The Six Berma Price Patterns
The Three Price Trends.
A chart is a two-dimensional graph, the vertical dimension is prices, and the horizontal dimension is time. Prices on this chart move from left to right in three directions, which are:
The first direction is the uptrend.
The second direction is the sideways trend.
The third direction is the downtrend.
Price action patterns.
Price action also occurs in two different ways:
The first is the semi-straight or linear movement. Which indicates the stability of the relationship between supply and demand, and the strength of the momentum behind the price action.
The second is the oscillating or zigzag movement. Where the price action takes a zigzag form, which indicates the lack of clarity in the relationship between supply and demand, and the weakness of the momentum behind the price action.
The Six Berma Patterns.
When combining the price patterns with the three trends, we see six forms of price action on the charts, which are:
- First, the linear upward movement.
- Second, the zigzag upward movement.
- Third, the linear sideways movement.
- Fourth, the zigzag sideways movement.
- Fifth, the linear downward movement.
- Sixth, the zigzag downward movement.
Here is a brief explanation of the six patterns.
First, the linear upward movement. Where we see the price candles or the price line moving in an upward direction that looks very much like a straight line, with minimal oscillations.
This is evidence of the strength of the upward movement that takes the form of a semi-straight upwards because demand dominates supply most of the time.
Second, the zigzag upward movement. Where prices move upward but in a zigzag and irregular manner. A wave of increase occurs, followed by a wave of decrease, followed by an increase, and so on. The waves of increase are longer than the waves of decrease and take more time to form.
This pattern indicates the struggle between the forces of supply and demand in the market. Every wave of increase is controlled by the forces of demand, and vice versa, every wave of decrease is controlled by the forces of supply. As the roles of supply and demand are exchanged, the final victory is in favor of demand, and we have a zigzag upward trend.
Third, the linear sideways movement. Where prices move forward almost horizontally. As if the battle between supply and demand is in a rest or truce phase.
This pattern appears during periods of calm in the markets in anticipation of the release of important news. Or as the weekend approaches in the currency market. Or as a major holiday approaches, such as New Year's.
Fourth, the zigzag sideways movement. Here we see a struggle between the forces of supply and demand, where prices move in waves up and down, but due to the momentum of the forces of supply and demand, the result is a zigzag sideways or oscillating price movement.
This pattern is common; and through it many patterns are formed in classical technical analysis, such as, supports and resistances, price channels, and other famous classical patterns.
Fifth, the linear downward movement. Where we see the price candles or the price line moving in a downward direction almost straight downward with the least possible amount of price waves.
This is evidence of the strength of the decline that takes a nearly straight downward shape due to the control of supply forces over demand most of the time.
Sixth, the zigzag downward movement. Where prices move downward in a zigzag or oscillatory manner. Where a downward wave of the price line occurs, followed by an upward wave, followed by a downward wave, and so on. Where the downward waves are longer than the upward waves and take more time to form.
This pattern indicates the struggle between the forces of supply and demand, until the forces of supply eventually dominate, and we have a downward zigzag trend.
Which Of the Six Patterns Is Best for Trading?
The trading plan in this course is based on determining the direction of the price movement.
If we want to speculate on the rise, we look for the strongest rising securities.
If we want to speculate on the fall, we look for the most falling securities.
We believe in the famous phrase said by the pioneer of financial markets, Marty Zweig “The trend is your friend”
It's a simple matter, trading with Berma patterns is very easy, and there is no complexity in it. If you intend to buy, all you must do is look for a chart of a security that moves almost straight from the bottom left of the chart to the top right.
If you intend to sell, all you must do is look for a chart that clearly and almost straight down from the top left to the bottom right.
When you are bullish you should look for that chart that looks like it is going to break through your computer screen and go all the way up to the ceiling of your room.
When you are bearish you should look for that chart that looks like it is going to break through your computer screen and go all the way down to the floor of your room.
In the End
That’s it, we at Berma buy strong securities, sell weak securities; then we rely on our own tools for automated trading – which we will explain in the following parts of this training course.
So, we have learned about the six Berma patterns and how to use them in trading.
Now, let’s move on to the next topic in this section of the training course.
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