Fractal price growth and measured retracements

A generator you can scale

A generator can be drawn as a straight-line price path with a zigzag overlaid to represent pattern. That cartoon is the base form used for measurement.

The same form is treated as scalable and fractal across timeframes. A fractal is a pattern whose smaller parts echo the larger whole and become more detailed as the scale shrinks. Scalability is the property that the same zigzag can appear on a larger timeframe and also generate smaller copies on shorter timeframes.

The same form on a weekly chart

The same generator idea was applied as multiple overlays on a weekly Standard & Poor's 500 chart dated as of January 2012.

Market price patterns are described as less perfectly symmetrical than natural golden-mean growth curves because of the human element. They are still treated as usable for measurement when growth continues in line with historical form.

The growth curve is the expanding, roughly symmetrical path a market traces when conditions stay favorable and price patterns continue to rhyme with their historical form.

When retracements keep the curve intact

As long as a market keeps producing measured retracements at predetermined levels, the case treats the growth pattern as still obvious and still pointing in the same direction. A measured retracement is a pullback that lands at a predetermined Fibonacci level and thereby keeps the existing growth-curve hypothesis alive.

The case frames later chart structure as a reflection of earlier structure, so that what happens next is treated as evolving from the pattern already in force.

Behavior that can outlast relationships

A recurring paycheck-and-savings example is used to argue that the behavior generating asset-class demand can persist even when market relationships change.