Swing Trading the Forex Market

It looks like AUDJPY and EURJPY might have initiated their moves. But as you can see, my measures have yet to confirm that there has been a genuine reversal in the day-to-day directional bias...

 

Then again, if I look to longer measures (i.e., the ten- and twelve-hour baselines and the 16-hour price range envelope at 1.35% deviation) I might be just as able to identify trade opportunities on a daily basis which once again offer even more substantial (potential) returns.

These would be trades such as looking to:

1. buy AUDJPY if the rate drops below 95.62
2. buy EURJPY if price drops below 156.68
3. buy GBPJPY below 182.82
4. buy AUDUSD if the eight-, ten- and 12-hour measures transition from bearish to bullish
5. sell EURUSD in the neighborhood of 1.0776
6. sell GBPUSD anywhere around or above 1.2567
7. buy USDCHF if/when the hourly trend turn bullish
8. buy USDJPY if the rate falls below 145.64

 

In general, I would characterize the Forex market as of late as being stagnate, aimless, confused and befuddled. Consequently, though I am satisfied with my recently developed approach to swing trading, practically speaking, it has meant remaining relatively inactive while waiting for rates to break out of their muddled uncertainty.

On the other hand, yesterday I designed chart configurations intended to take advantage of an aspect of Numerical Price Prediction (NPP) that I mentioned when responding to a question in another thread—the fact that NPP conceptualizes trends in the form of "belts" more so than moving averages, with the location of price within these corresponding expanse of values that constitute the width of the resulting oscillating bands being just as important as the direction in which each channel happens to be headed when one is deciding exactly where to enter and exit positions.

Applying the charts this morning led to four trades, each being profitable to a greater or lesser degree...



Given that it's my desire to finish every day with more money in my pocket then when I started, and the fact that I am satisfied that the approach to swing trading I've adopted over the last few days is valid and reliable, but is NOT able to guaranty that trading opportunities will present themselves each and every day, I will now leave this little swing trading experiment behind to focus on implementing (returning to) trading from an intraday point of view, with an emphasis on this NEW version of day trading which I am calling "Belt Trading."

 

Use the following observations to implement an approach to swing trading that IS able to guaranty DAILY trade opportunities:

1. The 36-day support and resistance levels are set at 3.00%, 6.00% and 10.00% deviation.
2. Reversals (at the "global" level) are confirmed by reversals in the two-, four- and six-day measures.
3. Generally speaking, you want to be trading in the direction of the slope of the six-day price range envelope.
4. By the way, rates will typically have a difficult time surging beyond 3.00% deviation with respect to this measure (from a "global" standpoint), and even when it comes to the "lower" level of 1.90% deviation, they won't usually extend beyond this boundary for long, and if anything, are more likely to "ride" or slide along this band as opposed to veering outside of it.
5. The second observation notwithstanding, above all else, you want to be trading in the direction of the daily trend, particularly when it matches the trajectory of the four-day measure, or better yet, when BOTH of these two measures are aligned with the slope of the six-day price flow as well. But again, the direction of the 24-hour trend always takes precedence!
6. In terms of "global" pullbacks, price tends to refrain from retreating more than the limit set by the contrarian band of the four-day price range envelope at 0.70% deviation, or 1.00% at the max...usually.
7. The limits of pullbacks in the 24-hour price range (the "local" level) is more-or-less defined by the zone extending form 0.30% deviation to 0.70% deviation.
8. Again, you will normally be looking to enter positions as rates are coming out of pull backs in the 24-hour price flow at 0.30% to 0.70% deviation, as conveyed by reversals in the four-hour price range envelope at 0.15% deviation.
9. The nine-, 11½- and 16-hour baselines help to confirm the direction of the immediate actionable (four-hour) price flow, seeing as how the four-hour measure is somewhat unstable.
10. If pullbacks are unable to reach even the 0.30% contrarian band of the 24-hour price range envelope, look to (possibly) enter positions as candlesticks are exiting pullbacks in the hourly price flow after they crossed over to the contrarian exterior of the four-hour price flow channel at 0.17% deviation to at least make contact with the 24-hour baseline.
11. Also, you can generally track pullbacks in the hourly price flow to the contrarian side of a sloping four-hour baseline.
12. Moreover, the hourly trend appears to have a habit of reversing direction, even when rates are surging, once they pass the levels defined by the daily price range at 0.70% deviation AND the region of the four-day price range between 0.70% to 1.00% deviation (and beyond, in the most extreme situations).
13. And finally, it would probably be a good idea to add the two-day price range envelope at 1.50% and 2.00% deviation, since the hourly trend (and sometimes, the four-hour trend as well) is often observed to reverse course at these two measures.

 

After taking a careful look at the "6½-hour confirmation" chart configuration, I noticed that one of the price structures that often serves as a signal that a given currency pair might have reached its daily high or low is when the upper or lower band of the 30-minute price flow envelope at 0.20% deviation makes contact with or breaches the upper or lower band (as appropriate) of a sloping 12-hour price range envelope at 0.20% deviation.



Note also that regardless of the overall direction in which rates are headed, they have a hard time keeping their candlesticks located to the outside of the 6½-hour price range envelope.

 

Note also that if price maintains its positional relationship to the 45-minute price range envelope at 0.05% deviation outside its interior for more than 30-minutes, you might be looking at what could possibly turn out to be the initiation of an extended run.

 

Here are your notes from the "Pullback to Near Black" chart configuration:

1. If the two-hour baseline is sloping, pullbacks to the contrarian side of this measure are potential entry points.
2. Better yet is if the two-hour AND five-hour price flows share the same trajectory, and candlesticks pull back to the contrarian side of the two-hour dynamic/adjustable price range envelope at 0.05% deviation.
3. Note that the five-hour price range envelope at 0.15% deviation serves a very similar role to that of the 12-hour price range envelope at 0.20% deviation pictured in Post #25, except you should not be surprised to see price reverse direction after breaching this channel’s upper or lower band regardless of the overall direction of the intraday trend.
4. If rates do NOT turn back under these circumstances, look for them to initiate a run, possible riding (sliding along) the corresponding band of the two-hour dynamic/adjustable price range envelope at 0.05% deviation.
5. On the other hand, it is not uncommon for price to eventually go ahead and turn around in the vicinity of the 0.13% deviation level if it fails to do so at the 0.05% mark (but as always—follow the 15-minute price flow—either way).
6. (It might be worth mentioning that the 60-minute dynamic/adjustable price range envelope at 0.13% deviation monitored in conjunction with the 120-minute measure can also be helpful in tracking what is going on with runs and reversals, especially when price is also in the neighborhood of the five-hour price range envelope at 0.15% deviation.)

If you pull back and look at price action over a more extended period of time, you find that anything beyond roughly seven hours sometimes does a very poor job of characterizing what is going on over the course of a given day, with perhaps five hours being as high as you will actually want to go.

This suggests that by and large, you will want to be trading in the direction recommended by an aligned 15- and 120-minute price flow.

 

Combine this with the 90-minute channel, also at 0.05% deviation.

The "normal" four-hour price flow surge level is approximately 0.28% deviation, with the typical pullback level being at 0.07% deviation. When it comes to an hour, the parameters are 0.16% and 0.07% respectively. These measures can be used to recommended reasonable entry and take-profit levels.

 

If the the 12- and/or 24-hour measures are trending, but have not yet reached their threshold levels, look to enter positions as price is coming out of pullbacks to the "back" side of the 12-hour price flow channel at 0.30% deviation.

If the the slope of the 12- and/or 24-hour measures reach their threshold levels, look to enter positions as price is coming out of pullbacks to the "back" side of the four- and/or eight-hour price flow channels at 0.16% and/or 0.25% deviation respectively.

 

Nonetheless, the twelve-hour measures do an excellent job of conveying in which direction rates are headed from day to day, thus informing you as to which direction you should be joining the intraday flow of the 15-minute to five-hour measures, and in which direction you should not.

You will probably be better off using the two-hour price range envelope at 0.07% deviation to gauge where to enter and exit shorter-term intraday positions rather than the four-hour and 60-minute channels.