The New Science of Technical Analysis

Chapter 13

“Waldo” Patterns^*

In recent years, a fictional cartoon character named Waldo^© has been popularized and promoted in books, posters, puzzles, and a game entitled “Where's Waldo?”^©. His creator, Martin Handford, has made it a challenge to find Waldo in the midst of hundreds of other cartoon figures. Camouflaged and hidden in the extreme recesses of these pictures is Waldo. His location is difficult to identify, but once shown or discovered it becomes obvious. This exercise reminded me of a similar process I have been involved in for years—identifying, on a chart, price patterns that are obscured and overwhelmed by the price activity surrounding them. Once I became aware of what to look for, however, this process was simple. Consequently, I have labeled these chart relationships and patterns as Waldo patterns. Rather than get into a lengthy discussion regarding their genesis, I will merely highlight their existence and underscore some of the observations I have made regarding their implications. Suffice it to say that I suggest you research these Waldo patterns to determine whether they might play a role in your trading program. Whether you deal in equities, futures, or cash markets, these patterns should convey similar messages.

When I started in the investment business, I was introduced to all the generally accepted market models, indicators, and techniques. It took approximately one year of hard work and heavy indoctrination by market technicians before I fully grasped ...