Curvilinear chart analysis
by D.O. Christian Reiger
Nothing in the universe moves in an unswerving line – least of all futures prices. Why then, should
straight lines dominate our technical analysis of charts? In the following examples, you'll see how the
curvilinear analysis of price evolution in several futures markets can answer some of the knotty questions
that technical traders face.
In particular, this analytical system provides an answer as to why price trends reverse where they do –
sometimes out of nowhere and at unfathomable times. The system also gives insight into chart formations
so as to better time trades. Additionally, it demonstrates relationships between past prices and patterns
and future ones the essential premise of the validity of technical analysis.
The apparatus used in the construction of these curves is the French curve of the drafting profession. You
can make your own French curve with Figure 1, which also shows the four ways (a-d) the curve is
positioned when plotting curves. For instance, on ensuing charts, the notation refers to curved line "A"
drawn with the French curve in the (c) position. As a straight line must be drawn on at least two points to
be valid, a curve must be drawn on a least three points to have predictive value.
The first basic method for plotting curves is to draw them on a series of market highs or market lows in
areas of price congestion such as accumulation patterns, distribution patterns and bull or bear trends. As
with straight line analysis, curved ones along the tops of such formations would indicate resistance and
those along the bottom, support.