Rangetraders guide to Price Projection

Discussion in 'Technical Analysis' started by RangeTrader, Aug 5, 2012.

  1. Because I am in a particularly good mood I decided to put up a tutorial for the different price projection techniques and where they apply.

    Lets start with the simple projection for trending markets.

    This projection is used in a market in which the trade cycles do not retrace more than 50% and has a lower high or higher low formed.

    The amount of time the market has to reach the projection is the same amount of time as the last cycle duration. If the trade hasn't reached the projection in a proportional amount of time you have to take your profits. It isn't actually important to solve if the move is heading toward the 50% projection or 100% projection. Just analyze the price action of the move a few days in and decide toward the end of the move.

    Momentum calculations are much easier to solve once the move has progressed at least two days.

    Most people here are trend traders... They trade from the inside of the range outward toward the maxims. Personally I prefer to swing trade from the outside of the range back toward the middle as the odds are better.
  2. And here is the same way to draw in the other direction.
  3. Now here is where things get more complicated... How do you do a price projection for a cycle that has retraced more than 50%? A move that has retraced more than 60% generally doesn't have the momentum to reach a half or double proportionate amount higher than the previous cycle.

    You draw from the lowest low of the previous cycle to the highest high then project that range from the bottom before the current cycle. That will then give you a good idea of where the market will top out at.
  4. When price has reached a proportionate target area in a proper proportionate amount of time minor resistance areas then become very important in solving the top accurately.
  5. So, are you curious why I am talking about positioning short at 1405 and 1410 this week instead of 1416 and 1422?
  6. As the previous move only consolidated for three days I am moving to a retrace projection as the usual projection is a bit over-optimistic. If the move had consolidated for a full five days the normal projection would be accurate...

    But when they variate the market into into short sequence mode of about three days this method of projection will give you more accurate target areas.

    That should just make common sense... If the market is trending for five days sequences then lowers to three day sequences the five day projections are no longer valid and you need to calculate three day projections...

    Using this trick with retracements is the only way to quickly get a price projection for a higher high or lower low move when sequences change.

    If the market tops out on Tuesday, drops for three days, then re-enters another rally cycle... The normal projections will be valid again as you have a three day cycle to draw them from!
  7. This target area is also in agreement with the weekly retracement resistance area approaching at 1406-1422.

    Man, if we get a chance to short at the highs again with a high volatility range it's going to be a dream come true!!! Whenever the market starts topping out it starts acting like a bear market with a large range expansion... Even without a rise in the VIX.

    We don't really have that much time to get there. Jackson Hole fed meetings and EU meetings in September are helping hold market sentiment up for now. In addition to central bankers waving their arms every few days and shouting "all is well!!!".
  8. Here is the main reason I think a lot of people around here need to do projections...

    They start screaming and yelling... "Price is going up day after day.. AHHHHHHH... Or price is going down every day, were going to crash... Ahhhh"

    Frigging delusional...

    With price projections you have a clear picture of the realistic target areas for a market move. When you know the general area where the move should reach and turn you don't get so emotional and have a more realistic view of the trade cycle.

    1410-1405 just makes sense this week. With the current momentumn levels and entering the second and third days after the engulfing reversal up it just makes sense. Reaching toward 1422 in this trade cycle is unrealistic with these current momentum levels.

    I don't particularly care much about the daily/weekly trendline. The market is pressing at it and how strong it's holding shows very good price action.
  9. For some reason, you don't seem to have a cult following.

  10. That's because I don't like people on here. Yawnn...

    Most of the time I'm just writing down my targets and rules here so that I remember them and actually not talking to anyone in particular. More of blog posts... But I got bored of maintaining my blog.

    It gets really boring playing a game without having other players to both talk to and screw with too...
    Half of my posts are serious, and half of them are just screwing with people.

    I like making sure people on here know I am intermittently screwing with them because it makes them less likely to copy any of my system.
    #10     Aug 5, 2012