EURUSD exploded out of its bearish attitude, such that I missed the initial opportunity to get in on the ride... So, the numbers now suggest that I buy an in-the-money binary option put contract given that price is near the upper extreme of the "magic price range." Surely the pair will not climb above the 1.1141 resistance level in the next hour. But unfortunately, the closest expiry I could get that included the relevant intervals was four hours away, so I'm going to have a long wait before I know the outcome of this trade.
RANDOM OBSERVATIONS: From a daily perspective, the yen pairs have become increasingly bullish since March 9, 2022, but look to be turning bearish this week. EURAUD is in the midst of a significant pullback in an otherwise bullish day-to-day trend, after this week reversing the bearish course it was on previously. So, I think it would make sense to enter a long position if and when I see the 20-, 45- and 90-minute baselines start heading north again. Since EURGBP has (1) been very bullish this week, (2) has technically not yet reversed direction from a daily perspective, and (3) is quite low in the longer term price ranges, it seems to me that I should be looking for the optimal moment to buy this pair. Ditto for EURUSD. EURJPY might also be a buy, even though the daily trend looks to be in the process of turning over. Seeing as how the day-to-day trend is bearish, I should have sold USDCAD seven hours ago, when the 60-minute baseline resumed a southward trajectory.
The following trades are made based on an assumption that the four-hour baseline and three-hour temporal support and resistance levels are valid measures for interpreting intraday price action. They are being made in my demo account, so I can afford to execute them with wild abandon and watch to see what happens. The Eureka Price Range suggests GBPJPY is unlikely to climb as high as 160.14 and the four-hour baseline is still bearish. This would imply that it's reasonable to expect price to return to the previous local low of 159.60, perhaps before reaching the ceiling of the 159.11 - 160.11 knock-out, hence the following purchase... I set my take-profit target at 159.61 which would provide me with a $26 payout if reached. The next situation with AUDJPY is the same as with GBPJPY... Here the mid-level top of the Eureka Price Range (as opposed to the extreme top) is at 91.30, so I went with the 90.58 - 91.33 knock-out with a take-profit target of 90.96, which should offer a $14 payout if hit. Everything about EURJPY is bearish. If it remains so, then logic would dictate its returning to the previous local low at 134.51 before hitting the upper band of the 45-minute price range at the 0.15% deviation "first level" of resistance. (The second level of resistance is at 0.26% deviation, with the "last line of defense" at 0.46%.) The scenario for EURAUD is about the same as it was for GBPJPY and AUDJPY except that the rate has climbed up to make contact with the three-hour temporal resistance level. So, if I set my stop loss such that the this number (1.4785) is halfway between my stop loss and my take-profit target down at the local low of 1.4769, it places the boundary at approximately 1.4800. These trades are all being executed at around 12:30 p.m. PST, which is essentially dead time in the Forex market. So, I'm noting the hour to see how long it takes for these pairs to reach their targets, if ever.
GBPJPY has climbed to the first level of resistance on the new chart that was configured this morning (at 159.97), but the four-hour price flow is still bearish. The ultimate resistance level from this morning's chart is up at 160.64, as compared to the initial mid-level eureka number at 160.14, and the extreme eureka level at 160.48
This mornings proprietary chart depicts USDCHF as full on bearish, with the four-hour price flow switching from bullish to bearish nine hours ago. The hourly price flow was bullish during the past six hours, but that just changed. Moreover, a cursory glance at a one-hour chart derived from this morning's proprietary chart suggests that entering a short position when price rises above a bearish four-hour baseline will more often than not culminate in a profitable trade, which is the situation that has just unfolded with USDCHF. Resistance levels on the proprietary chart are at 0.9234 and 0.9249. On the one minute eureka chart, the mid-level resistance band is at 0.9250 and the extreme level is 0.9271. I am therefore purchasing the .9149 - .9249 knock-out. My take-profit target is 0.9210, which means the potential payout is $19.00. At 160.08, GBPJPY is only 3 pips away from the knock-out ceiling, so things are not looking so great for that particular trade. UPDATE: The GBPJPY position was just stopped out, thanks to the 45-minute price flow turning bullish two or three hours ago.
So here's the deal (as Joe Biden so loves to say)... When you strip everything away, what this morning's chart was trying to do was forecast where price is ultimately headed based on direction and the four-hour price range. When you put it that way, I don't think AUDJPY is climbing any higher than 91.82, all things being equal. So, even though price is headed higher right now, in that the pair looks to be headed lower overall, I'm going to enter a short position via a Nadex knock-out based on those numbers. (In the future I will wait for an actual sell signal before executing these kinds of trades, especially when I go back to trading my live account.) Based on this approach, right now I don't want to be trading most pairs because from this perspective, the majority of them are neutral. USDJPY and EURJPY are exceptions, but I will wait until I get an actual sell signal before I short either of them.
Thursday | March 31, 2022 |10:00 PM PST I now have these two knock-outs in play, along with four others, and will be curious to see how they unfold/develop over the next few hours.
Thursday | March 31, 2022 |11:30 PM PST Well, at this point, this definitely looks like the best way to apply the Numerical Price Prediction system of trading to foreign currency pairs (derivatives) via the NADEX platform. The knock-outs eliminate the problem of the totally insane in-the-money risk-to-reward structures characterizing Nadex binary options, and the general trend/four-hour price range orientation leads to payouts that should easily average somewhere between $20 to $25 per transaction.
A REPEATING PATTERN Watch for the 6-minute baseline to make contact with the 45-minute price range at 0.15% deviation and possibly 0.26% deviation as well. As it departs, wait for it to cross over the 20-minute baseline and use this as a signal to buy or sell the corresponding asset, as appropriate... So then, more generally, you're buying and selling the currency pairs (and major indices) following reversals in the 20-minute baseline. Evaluate how this relates to the overall intraday price flow and four-hour price range, not to mention the eureka price range and three-hour temporal support/resistance levels. (Using these measures has led to a very profitable 24-hour market cycle this last day of trading for the week.)
The eureka price ranges are more-or-less redundant with/to the 45-minute price ranges. Use the six-hour, three-hour and 45-minute price flows to clarify whether you should use the repeating pattern to buy or to sell a given asset (or neither). Use the 45-minute, three-hour, six-hour and daily price ranges (as well as the three-hour temporal support/resistance levels) to help anticipate where reversals in the repeating pattern are likely to occur, and whether it would make more sense to purchase a binary option contract or to enter a knock-out position with respect to each trade opportunity. Given the use of the above parameters, the four-hour measures are not really needed. The six-hour price flow is a more reliable gauge of the overall general intraday price flow, and the lower/faster measures are more responsive and less prone to lag when it comes to detecting/conveying reversals in the intraday trend. A good description of the purpose for my having recorded what I typed above... Technical Analysis vs Trading Strategy By Nick McDonald Think of technical analysis as ingredients. Trading strategy is the recipe. Imagine you want to bake a chocolate cake and like me you have not done this before. You have sugar, flour, chocolate, butter and milk… but no recipe. What do you do? Where do you start? The ingredients are of no use to you on their own. The recipe is what enables you to get the end result – a chocolate cake. Each technical tool can have many uses, just like a cup of flour can. Similarly, each is virtually useless on its own. Many traders are using each TA tool in isolation and moving from tool to tool trying to find the one that works. That is the equivalent of trying to bake a cake with a cup of sugar and when that fails, trying to bake it with a cup of flour. Just like a cook needs a recipe to achieve an end result, a trader needs a trading strategy. In this case the end result is a trade that has a higher probability of doing what you expected than not. Trading is a game of probabilities and a good trading strategy puts probability in your favour.