Below is a slider quiz to test your ability to identify pipe bottoms and trade them. Captions appear below the pictures in red for guidance, so be sure to scroll down far enough to read them.
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All of the charts in this quiz are on the weekly scale. Pipe bottoms, shown here as P (two of them) are twin downward price spikes which are longer than most of the prior
year's spikes. They are two adjacent weeks with the weeks surrounding the pipe pattern having lows well above the pipes. In other words, if this were a forest upside down, the pipe pattern
would stand well above the surrounding trees. Price confirms the pattern when it closes above the top of the higher of the two spikes. If it doesn't do that, then you don't have a pipe.
I show confirmation on this chart by the horizontal red line at A.
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Your turn. Find as many pipe bottoms as you can. For help, click here.
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The valid pipes are labeled quite cleverly with a P. The twin bottoms at points A (two of them) are probably not pipes because the spikes aren't long enough.
Compare the valid pipes with those at the two As. Let's try again. (Next slide please...)
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Find as many pipe bottoms as you can.
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The pipes are labeled P. The three U points are not pipes because they are not confirmed (price doesn't close above the taller of the two spikes) before closing below
the bottom of the pattern. The pipe on the far right bottom of the chart has confirmed as a valid pipe. How far up will price rise? Pick one of the numbers in green.
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The pipe is the lowest one on the page leading to a nice rise. The correct answer is line 2.