As I look back over my charts, the numbers suggest to me that when a foreign currency pair is trending in the manner that USDCHF is now, and price crosses over to the "far" side of the dotted goldenrod trendline, that unless the pair unfortunately decides to initiate a wholesale reversal, the next day's candlestick will invariably resume heading in the direction suggested by the graphics. Accordingly, to test this presumed observation, I plan to short this pair after the first sixty minutes of the next 24-hour market cycle has transpired (to give the erratic price behavior that typifies this interval of time a chance to die down before I take action). When I extrapolate the same measures to my four-hour charts, I find that the numbers suggest selling USDCAD at the top of this "green" candlestick should theoretically lead to a profitable trade as well. So, let me go ahead and short the pair to find out whether this proves to be true.
I'm going to go ahead and pocket the gains I have now here (about 14 pip's worth) before I end up giving it all back...
I decided NOT to short USDCAD after all, because the daily chart now looks neutral. But then, when the pair made an initial move south, I rechecked the four-hour chart and discovered that it was still bearish! The only problem was, that initial move was...like...already halfway to what I might have chosen as a target. Yet, what really put the freeze on my selling the pair is that it has essentially been range bound for roughly three days now! So...I guess I'll pass.
With the above unfolding as it did, it prompted me to take another look at my four-hour charts, and this act led me to insert a lower-panel histogram, concluding that the best time to enter a position might possibly be if a pair breached and then seemed to be maintaining measures beyond the 0.4428 or -0.4428 levels, indicative of a probable run... Since this seemed to be exactly what AUDJPY was doing, I decided to put my theory to the test by entering a short position at 96.03 and setting my take-profit target at 95.66 (and my stop loss at 96.40), figuring that if I was correct, price would move in my favor while I slept, possibly even hitting my target before I woke up the next morning. And indeed this is exactly what happened... Indeed, the four-hour chart is now BULLISH!
Thursday | February 1, 2024 | 9:05 AM PST So, at this point in the implementation/application of Numerical Price Prediction (NPP), I feel there are a few seemingly definitive observations that I should record for my easy reference in a more-or-less permanent format which I can come back to in case they should somehow become lost/destroyed in my personal notes/papers, as follows: It is difficult to trade based of measures of five-minutes and faster due to their extremely frequent fluctuations. As one might suspect, the ten-minute price flow is easier to track, but it too is rather unstable. It appears that the fastest "actionable" price flow at the intraday level is comprised of the 15-/16-minute measures, as confirmed by the 20-minute baseline or price flow, with the faster measures (five minutes and below) being of probable practical use in optimizing the entrance and exit of positions depending on the position of price within the slower price range envelopes. However, even the 15-/16-minute measures evidence a certain amount of relatively significant intraday ebb and flow, and therefore represent relatively short-term trade opportunities. To discern the direction in which rates are more than likely (ultimately) headed from a longer-term intraday perspective, one needs to consult the slopes of the 60- and 90-minute baselines, and the positional relationship of price action with respect to these two measures.
USDCAD's and USDCHF's bullish attitudes turned out to be only temporary. But unfortunately, I was asleep when they decided to yield to the overall bearish inclinations they've displayed over the last six or seven days. I actually bought USDCAD at 1.3351 a few minutes ago, seeing as how it plummeted to the bottom of the corresponding channel. However, whether this contrarian move will prove to be profitable in the end will depend, I suppose, on whether the fundamental factor(s) pushing it south are strong enough to continue forcing it beyond the lower limits of its anticipated (daily) price range.
My bad... 1.3351 was my stop loss. I bought the pair at 1.3385, and it spent hours and hours dilly-dallying before finally taking advantage of this morning's release of economic data to at long last shoot up to where the charts suggested it might eventually go.
In deleting most of the chart configurations you composed over the last couple of months, keeping the best of what each had to offer and translating measures from slower charts to faster ones and vice versa, you ended up with (the two lower panels on) the chart with the numbers one, five and one; and the words "path" and "standardized," as pictured below. The basic idea was to check whether it would make sense to buy whenever the oscillator in the top lower panel and the histogram in the bottom lower panel were BOTH above their respective upper threshold lines; and see if it would make sense to sell whenever the oscillator in the top lower panel and the histogram in the bottom lower panel were BOTH below their respective lower threshold lines... However, after you shaded the graph with the colors yellow green and pink, you noticed something else... That it looked like profitable trades would often be executed if the asset were bought as the oscillator in the top lower panel crossed over from the exterior of the middle channel into and then across the interior of the channel from below; AND if the asset were sold as the oscillator in the top lower panel crossed over from the exterior of the middle channel into and then across the interior of the channel from above... So, go back to the original configuration (before you deleted all the indicators from the main chart) and evaluate exactly what was happening with them each time the oscillator reentered the interior of the channel so that you understand the logic (and the numbers) behind why this seems to work. UPDATE: Very interesting! There WAS NO graphic on the chart that corresponded to these numbers, so I guess I'll go ahead and plot a corresponding indicator on the chart right now...
So then, I've plotted main chart indicators based on the observations I made in my previous post, which basically entail three scenarios: SCENARIO ONE: If the lower band of the aqua envelope is keeping pace with or leading an upward sloping fat orange/peach baseline, it justifies being in a long position (see the shaded yellow green vertical bands). Conversely, if the upper band of the aqua envelope is keeping pace with or leading a downward sloping fat orange/peach baseline, it justifies being in a short position (see the pink vertical strips). SCENARIO TWO: If the lower band of the aqua envelope is keeping pace with or leading an upward sloping fat orange/peach baseline AND the fat orange/peach baseline is keeping pace with or outstripping an upward sloping bold, upper band belonging to the dark slate blue envelope, it reinforces the rationale for being in a long position (see the deep green vertical bands). Conversely, if the upper band of the aqua envelope is keeping pace with or leading a downward sloping fat orange/peach baseline AND the fat orange/peach baseline is keeping pace with or outstripping a downward sloping bold, lower band belonging to the dark slate blue envelope, it is all the more reason to be in a short position (see the deep red vertical belts). SCENARIO THREE: On the other hand, if ALL you see is the fat orange/peach baseline keeping pace with or outstripping the bold, upper band of the dark slate blue envelope (see the pale green vertical strips); OR all you see is the fat orange/peach baseline keeping pace with or outstripping the bold, lower band of the dark slate blue envelope (see the vertical light pink shaded areas), this by itself does NOT justify entering a position, and you should therefore remain on the sidelines. CAVEAT: Any diagnosis based on the first or second scenario is negated IF the slope of the aqua envelope (or the gist of its overall progress) is in opposition to the direction of the proposed trade under consideration (see the yellow zones). P.S. In the very last (white) section, it is borderline debatable as to whether or not you can justify entering a long position.
Monday | February 5, 2024 | 7:00 AM PST My observations from late afternoon Sunday and Sunday night have led me to modify my views slightly from the above. In reality, the "fastest actionable" price flow at the intraday level, meaning the 15-/16-minute measures, turn out NOT to trace the price action of foreign currency pairs closely enough, resulting in a lack of adequate precision. The alternative approach would be to shadow rates for entry and exit levels using the three-minute price flow channel at 0.02% deviation, with the ten-minute price range channel at 0.4% deviation serving as a more precise measure for conveying the "fastest actionable" maneuvers, and then skipping over the 15-/16-minute measures to rely on the 20-minute price range envelope at 0.07% deviation to define the overall general "gist" of where candlesticks are ultimately headed in the short run. The broader bounds of this action is suggested by the 40-minute price range envelope at 0.18% deviation, with the overall general direction in which rates are ultimately headed in the longer run (from an intraday perspective) represented by the 60- and especially the 90-minute baselines.