t。
What is。so special about this。particular moving average； the PLdot； that sets。it apart from other moving averages？ The characteristics。of the dot prove to be useful in analysis。 It moves。across。the chart horizontally in congestion； and when a trend develops； it immediately changes。into a straight line slanted in the direction of the trend with very little lag。 It is。extraordinarily。sensitive to trending markets； very quick。to register the change of a market out of congestion into trend and sensitive to a trend that is。ending； as。well。
The PLdot captures。the heart of market activity on the last three bars。 In Drummond Geometry； this。point would be thought of as。the center of energy and represents。the consensus。of the crowd。 But additional tools。are needed to gauge the strength of moves away from thisnsensus。 For this； other moving averages。are added。 To give the methodology greater muscle。 Drummond added a simple envelope system constructed of a constant mathematical relationship based on the ponents。of the dot。 The resulting structure is。illustrated in Figure 1。2。
Unlike many envelope systems； the objective here is not to contain all price activity within the envelope but to offer a constant； or a matrix； against which market moves。can be measured。 This。turns。out to be of great value when trying to tailor trading techniques。to different market conditions。
The envelope system is。also useful as a constant against which to measure the strength of recent and current market energy。 When the market is。in congestion； price tends to oscillate from one side of the envelope to another； thus； the trader has。a pretty good idea of where the buying and1 selling /ones。will be placed in the market。 But when the market is。in a strong trend； the envelope functions。differently。 The PLdot can be seen as。〃pushing〃 price in a trend； and the envelope top or bottom will be broken in the direction of the trend； with price bats。often closing outside the envelope； and the envelope itself functioning as。support or resistance。 Price retracements。in a trend will not move to the opposite side of the envelope but instead lend to stop at the level of the PLdot。 In a strong trend； the bars。will close outside of the envelope until the trend pauses。or has。finished； at which point they will move back inside the envelope。
Both the PLdot and the envelope are useful elements in determining support and resistance levels； but by themselves。they are not sufficient。 To these elements； Drummond analysis。adds。a series。of short…term； two…bar trend lines。that flag areas。where price is。likely。to terminate。 In the full methodology； there are a significant number of these lines； here just a few are shown。
In Figure 1。3； we can see how these short…term trend linesntribute to the definition of nearby support and resistance arras。（shown by a gray box） and the further out support and resistance areas。（shown by a black…outlined box）。 Note also that these lines； along with the PLdot and the envelope； are projected into the near…term future； so that the trader always。knows where the support and resistance areas are that the market is。moving into。 The trader does。not focus。on areas。that existed in the past but is。always。oriented toward the developing future。
If we apply these elements。to a chart； we see the full envelope system together with the support and resistance zones。established by the envelope； the dot； and the short…term trend lines； with these tools。all projected into the future； onto the bar that has。not yet formed。 This。setup constitutes the basic。chart framework for any single time frame in Drummond Geometry。 In Figure 1。4 we can see this。full set of tools。applied to a chart。 Note the resistance and support areas plotted on top of each bar； along with the envelope and the PLdot。 The price bars。are plotted using a heavyweight “fat〃 bar so that the resistance and support tools。can be plotted on top of them without obliterating the price bars。themselves。 The critical point is。that these elements。are projected forward into the future so that the trader always sees。them ing up at him； on the right…hand side of the chart as。time ticks。forward and market activity unfolds。
Now let's。stop and consider these few ponents。of the first major section of Drummond Geometry。 We have the definition of support and resistance； we have a means of monitoring market energy （placement and movement within and outside of the envelope system）； a means。of determining current market direction and future shifts。in that direction （dot direction and slope）； and a means。of determining where price energy will terminate （where price is。likely to stop for a given bar）。 All of these elements。are extremely valuable to the trader。 But as。helpful as。these tools。are； by themselves。they are not enough for success。
Predicting the State of the Market
Now let's。look。at the second leg of this。three…legged stool。 We need to know what the market is。doing now； and we need to know what we expect the market to do next。 We need to understand and predict the “state” of the market。
In essence； we must establish the market's internal decision…making tree for possible future actions。 It's。as。if we could step inside the mind of the market； determine its。present state of mind； and then determine the choices。that are available to it for the immediate future。 Applying a bit of logic； we can see that there are only a limited number of actions。that the market can take。 If the market is。in a trend； for example； it has。a very simple choice ahead of it。 It can do only one of two things： continue that trend or enter congestion。 If the market is。in congestion； it can do only two things： continue that congestion or start to exit congestion into another trend。 If you can develop clear and unambiguous。definitions。of trend and congestion； then determining the market's。present type of trading and its。next anticipated type of trading is。a matter of quick。and simple analysis。 Knowing that the next type of trading will be one of two choices。means。that the trader can focus。attention on the specific。characteristics。of the anticipated next type of trading and thus。have a clear understanding of whether the pattern is。actually occurring。 And if it is。not； then the trader knows。that the alternate choice is。occurring。 This。makes。monitoring market action much more efficient and effective because the checkpoints。and checklists。to be watched are clear and easily identified。
Types of Trading
In Drummond Geometry there are only five types。of trading：
。
Trend
。
Congestion entrance
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Congestion action
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Congestion exit
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Trend reversal
Each type is。clearly defined： trend trading； for example； describes a situation in any。given period when three successive price bars。close on the same side of the PLdot。 Thus； looking at the market at any point； we know whether that market is。in a trend or not。 Congestion entrance trading is。characterized by the following： the market has。been in a trend — that is； at least the last three bars。have closed on one side of the PLdot — but the next bar closes on the opposite side of the PLdot。 In Figure 1。1； the bar marked T。（fifth bar from the left on the chart） defines。the start of a trend because it is。the third bar in a row that closes。above the PLdot。 The market remains。in a trend until it reaches。the bar marked CE； which is。the first close on the opposite side of the PLdot； at that point； the market is。in congestion entrance trading。 Similar； unambiguous。definitionsver congestion action； congestion exit； and trend reversal trading。 These unambiguous。definitions。put traders。in the driver's。seat； because they can watch for exactly the action that will be required to change the basic。orientation or 〃state〃 of market action。 The trader can monitor for precisely those elements。that are expected to occur。
Multiple Time Period Analysis
The first two major elements。of Drummond Geometry — the definition of future support and resistance and the definition of the anticipated market state； or next type of trading — give traders。a leg up； because with them they can start to identify the potential turning points。at support and resistance levels。as。the market moves。forward。 To these major elements Drummond Geometry。adds。the concepts。of “dot push” and “dot refresh”； which describe movement away from the dot and market movement returning to the dot； respectively。 We can say that dots。push trends； support and resistance areas。terminate trends； and the market moves。from one type of trading to another type of trading in a regular； predictable manner。
In Figure 1。4； we can see how： the dots。push a strong trend upward and that as。the market moves。upward； the dots。act as。support for the trend； the price bars。close over the top of the envelope； and the price bars。can break。nearby resistance and move into the resistance areas。further out。 When the trend stops； nearby resistance bees。strong and holds； and the dots。start to move sideways as。the market churns。through itsngestion areas； oscillating between the nearby support and resistance areas； which tend to hold and not break。
These are excellent advances； but they are still not enough to provide a successful； reliable； a