There is now almost no doubt that relying on the red moving average to determine the ultimate direction of price is unnecessary. For in addition to waiting for candlesticks to begin forming on the "inside" of the moving average cluster before entering a given position, it also makes sense to conceptualize the purple moving average as the arbiter of whether the position should be short or long. The red moving average should instead be used in the same way I was using the green band in the image included in Post #55 of the "Scalping with a hard stop loss" thread on January 22, 2019... In other words, it should be turned into an envelope and used as a sort of authorization channel, or chop zone, if you will... If the moving averages lack the momentum required to break free of this approval band (blackish-blue now instead of red) price is more than likely going nowhere and I should therefore pass on any potential opportunities to execute possible trades.
The authorization channel that was reinserted in Post #101, but also recalibrated, was derived from a key moving average I was using on my one-hour chart setups a year or so ago. In evaluating how it was performing, I felt it would be useful for me to label a whole set of moving averages as “the complex” and a separate triplet of moving averages as “the threefold cord.” My thought as of this morning is that a reversal is not validated or confirmed until the entire complex has passed through the threefold cord at the very least, and preferably through the authorization channel as well. After drawing this conclusion, I took another look at the old one-hour chart setup from which I adopted the new authorization channel and modified it in accordance to what I now believe about the complex and the threefold cord. My interpretation of the resulting configuration has led to three or four forecasts I would like to act on to validate or invalidate what I believe I am looking at. First, I believe I detect a significant possibility of AUDJPY turning south in the next 48 hours, so if and when the complex crosses below the threefold cord (and the authorization channel?) I am likely to enter a short position. The same is true of CADJPY. On the other hand, I am likely to buy USDCAD if and when authorized to do so (and perhaps EURAUD as well).
The forecasts for both long positions have now been validated, but the two short positions have yet to deliver.
I will be attempting to exit my AUDJPY position at 78.92. If I am able to do so, I will have exited all four of the previously mentioned trades without incurring a loss. Otherwise, the trades will have yielded a 75% success rate. Either way, they will NOT have validated what I believed I was looking out. However, what they WILL have done was enabled me to eliminate all of the apparently extraneous indicators to make the most efficient and effective use of those graphics constituting a map with the potential to guide me in and out of positions with possibly the highest degree of precision I have managed thus far... I will not comment on the setup's application, but even so, just the image itself probably provides sufficient information to suggest how this configuration might offer a trader enough of what he or she needs to know to enter and exit positions when it makes the most sense to do so.
I added two additional moving averages, but they kind of just get in the way and are there primarily for context. They are moving averages that provided major guidance in the past, so everything I’m doing now is either confirming our reintroducing something I did before. What HAS changed is that I now assign the greatest significance to the “bumblebee” moving average plainly visible in the previous post, which IS a moving average that didn’t exist until last week. I have also thrown out several longer-term moving averages which I now regard as essentially irrelevant for intraday trading. Having come full circle, but with just a couple of subtle, nuanced, yet extremely critical adaptations/modifications, perhaps I can now get my success rate from 75% back up to 90% or better. I thought I was done before, but now that I’m back where I started with just a couple of little changes, I’m hoping this time it actually turns out to be true.
Yeah, this is it. I'm satisfied with the results realized using this setup (which is represented on the above chart from about the sixth trade moving forward) and don't anticipate making any additional changes. I like this configuration as is...
There are a relatively limited number of templates I have not deleted from the vast range that once existed. Of the four that remain in this time frame, I think options 2 and 4 do a better job of defining the more immediate price range, whereas option 1 is probably best for defining the wider range (under more extreme conditions). 1, 2, and 4 all track the general direction in a similar fashion, but I find the tracking carried out by the faster trend lines to be smoother on the fourth chart, so I’m going to combine what I like from the main three charts to generate a single chart form which to carry on my trading going forward... (I added the red moving average from Chart #1 a little later, so it's not included in the image below.) ...and hopefully continue to realize similar results:
I think it is now safe to conclude that my general goal of improving performance by remaining in trades for a more extended period of time has been achieved. But rather than set a flat 25-pip minimum take-profit target, I’ve formed the opinion that it makes more sense to let the number of pips I attempt to reap be dictated by each individual scenario. The same holds true for where I set my stop losses. As for time of day, though I find the best hours are between 10:00 p.m. to 2:00 a.m., and 5:00 a.m. to 11:00 a.m., here on the West Coast of the United States, it is impossible for me to know with any amount of certainty when the exchange rate of a particular currency pair is going to make a move, so I enter positions whenever the structure of a given asset justifies the action, irrespective of time of day. (However, I do avoid trading at 2:00 p.m. PST in that it is not unusual for rates to behave in a manner that is totally bizarre during this hour.)