what is the theoretical basis for this rule? or is it an empirical one?
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DislikedIt is quite simple in concept. Some people apply a measurement to legs of price movement, regardless of time. I apply it to fixed intervals such as 1 day, week, month etc.
The "theory" is that a bounce of unknown extent is likely here. Why? I don't know, but it does work and does so very well, especially coupled with peak and valley analysis. I see it as a likely place for price to take off form should it get hit. If the day opens at around this level and trades around it for a few hours then it is pretty much useless. If price opens somewhere else and then arrives there with intent, a reaction is far more likely. Alas today USD/JPY with the 50% of the previous GMT day:Ignored
Dislikedthe thing i'm looking for is if there is a logical explanation (don;t dare to say scientific), in addition to the empirical one.
like we all know the sky is blue, but some smart scientists found a reason why.Ignored