Martin Pring on Price Patterns: The Definitive Guide to Price Pattern Analysis and Interpretation

By Martin J. Pring

Quick Summary

A comprehensive technical analysis reference devoted entirely to price pattern recognition and interpretation. Pring, one of the most respected names in technical analysis, provides exhaustive coverage of all major chart patterns -- from basic building blocks like support/resistance and trendlines to complex formations like head and shoulders, triangles, rectangles, broadening formations, and their many variations. The book emphasizes practical pattern identification and includes objective measuring techniques for price targets derived from pattern breakouts.

Categories

• Technical Analysis
• Trading

Detailed Summary

"Martin Pring on Price Patterns: The Definitive Guide to Price Pattern Analysis and Interpretation" (McGraw-Hill, 2005) by Martin J. Pring is a 370-page reference work that represents the most thorough treatment of chart pattern analysis available. Pring, author of "Technical Analysis Explained" and one of technical analysis's most influential practitioners, organizes the subject with pedagogical clarity.

Part I: Basic Building Blocks establishes the foundational concepts on which all pattern analysis rests.

The book begins with time frames and their significance, emphasizing that technical principles apply equally across all time frames but that longer time frames carry greater significance. It covers the three primary trend categories -- primary, intermediate, and short-term -- and how they simultaneously influence price.

Peak-and-trough progression is presented as the most fundamental trend identification technique. Pring establishes the rule of thumb that a legitimate new peak or trough requires a retracement of one-third to two-thirds of the previous move. The importance of logarithmic versus arithmetic chart scaling is explained, with Pring advocating logarithmic scaling because equal percentage moves appear as equal distances.

Support and resistance zones receive detailed treatment. Pring defines support as "buying sufficient in volume to halt a downtrend for an appreciable period" and resistance as "selling sufficient in volume to satisfy all bids and hence stop prices from going higher for a time." He explains how support becomes resistance (and vice versa) when penetrated, the role of psychological round numbers, and how volume at support/resistance levels confirms or disconfirms their significance.

Part II: Classical Patterns provides exhaustive coverage of recognized chart formations. Head and shoulders patterns (both tops and bottoms) are analyzed in detail, including measuring implications, volume characteristics, complex variations, and failure patterns. Triangles (symmetrical, ascending, descending) receive thorough treatment, including the time dimension (breakouts should occur within two-thirds of the pattern's width), volume characteristics, and measuring techniques. Rectangles, flags, pennants, wedges, and broadening formations are each covered with similar rigor.

Part III: Advanced Concepts addresses pattern reliability, the role of volume in confirming patterns, the use of patterns across different asset classes (stocks, bonds, commodities, currencies), and the integration of pattern analysis with other technical tools. Pring discusses the psychological dynamics that create patterns -- how the tug-of-war between buyers and sellers creates recognizable geometric formations that repeat because human psychology is constant.

Throughout the book, Pring provides practical price objective calculations for each pattern type. The measurement technique typically involves measuring the height of the pattern at its widest point and projecting that distance from the breakout point. Pring is careful to note that these targets represent minimum expected moves and should be used in conjunction with other analytical methods.

The book's value lies in its comprehensiveness and Pring's decades of experience interpreting patterns across diverse markets. Every pattern is illustrated with multiple real-world chart examples, and common misidentifications are addressed to help readers avoid false signals. The emphasis on logarithmic scaling for accurate pattern measurement is a particularly important practical point that many analysts overlook.