Analysis and Trading based on Envelopes, Waves, Cycles

Very good informative information and charts my friend thank you

UTILISATION OF THE FRACTAL OF PRICE


The main idea is that the "Fractal" of Price goes from the SRL (Support & Resistance Level) 0/8 to 8/8 - this Fractal is ruled by its Price Octave of value =1/8 th of the Price Range. (12.5 % of the Fractal of Price)

As long as Price Action does not fluctuate above the Upper (SRL 8/8 Ultimate Resistance) and under the Lower (SRL 0/8 Baseline) Limits of the Fractal of Price of plus or minus 25 %, Price Action will be "ruled" by the same "Octave" (your Octave Gap).

Above or under these limits Price Action are ruled by another "Octave (Octave Gap), multiplied or divided by 2 because they have penetrated in a different price territory.

Let's take an example with SES GLOBAL - a french corporation.

The table shows us the Fractal of Price ruling the Price Action of SES GLOBAL for a Top of 19.08 (at the time) and a Bottom of 11.34

Then the Price Range is 9.375 points = 20.3125 - 10.9375 . Price Octave = 0.78125

Let's assume that SES GLOBAL Price Action breaks the Upper Limit of the Price Range, then we get a new Fractal.

The new Price Range is now 18.5 points = 28.125 - 9.375 with a Price Octave (Octave Gap) of 1.5625

Price Range and Price Octave (Octave Gap) have simultaneously doubled.

If you compare the Fractal of Price BEFORE Price Action broke its upper limit of 20,3125 with the new Fractal AFTER Price Action has broken 20,3125 generated for example if Price Action of SES GLOBAL has reached 20.50, you observe that :

- Support and Resistance Line SRL (0/8) stayed the same in both fractals.

Reason is that the last significant bottom has not changed. Price Action has only broken the upper limit of the previous fractal.

- One key point is that the former Support & Resistance Line SRL (8/8) whose property was Ultimate Support & Resistance become in the new Fractal the Support & Resistance Line SRL (4/8) - whose property is Major Support & Resistance / Center of Gravity.

- The former Support & Resistance Line (4/8) whose properties were Major Support & Resistance / Center of Gravity become in the new Fractal Support and Resistance Line SRL (2/8) whose properties are Pivot, Reverse.

- The Support & Resistance Line SRL (2/8) in the former Fractal become in the new Fractal the Support and Resistance Line SRL (1/8) - whose properties are Weak, Stall & Reverse.

From a Strong Line in the former Fractal SRL (2/8) is now a Weak Line in the new Fractal. Everything is relative.

- The Support & Resistance Line SRL (6/8) in the former Fractal whose properties were Pivot, Reverse become in the new Fractal the Lower Limit of the Trading Zone (3/8).

- The Support & Resistance Line SRL (+ 2/8) in the former Fractal become the Upper Limit of the Trading Zone (5/8) in the new Fractal.

Following the extension or contraction of the Fractals of Price the Support & Resistance Lines (SRL) see their status change, have different properties and sometimes simply vanished.

The first step of Gann estimation of the Law of Vibration was de facto the division by 8 of a Price Interval generally between a Low and a Top.

As I showed it this division mimics a parabol which mimics the graphical representation of the Fibonacci ( to my knowledge Gann never wrote such explanations)

To paraphrase Jim Hurst it is " a robust, but not bad" approximation

Gann Version 2.0 is the division by 8 of a FIXED Interval, interval which is not specific to a particular financial instrument and a specific price movement of this financial instrument..

This FIXED interval is active and operative for whatever financial instruments whose price movement fluctuates within the interval.
The first interval studied was the interval (0-10) . And the Octave is 10 / 8 = 1,25.

Practically it means that ALL financial instruments whose price movement fluctuates within the Price Range (0-10) is very sensitive to the Octave (Vibration) 1.25 and its subdivision.

If a financial instrument price movement fluctuates above 10, it is assumed that the price movement of this financial instrument fluctuates within a Price Range (0-100) of a higher order.

You can see on the Table that you just have to move the decimal on the right to get the new Octave and the new divisions of the Price Range.

Gann Version 2.0 was popularized by T.H. Murrey under the Name of "Murrey Maths" - Autosimilarity (or Fractalization) is the Core of Murrey Maths

This system is very simple and portable, you manipulate always the same numbers and proportions.

Obviously for Forex use you just have to move the decimal on the left to get the new Octave and the new divisions of the Price Range.

What are the advantages of Gann Version 2.0 over the 1.0 Version ?

1. Stability : No automatic need to recalculate the Price Range and the Octave as soon as price movement reaches a new High or a new Bottom.
2. Simplicity of use :

you just have to move the decimal on the right or on the left to follow the fluctuations of price movement when you have to use a new "Fractal of Price" (Price Range) up or down

you manipulate always the same numbers and proportions.

- Efficiency :

1. you can easyly compare the different price movements of the concerned financial instrument within the same "fractal of Price" (Price Range)
2. you can easyly compare the price movements of several different financial instruments fluctuating within the same "fractal of Price" (Trading Range)
3. you can create "groups" of financial instruments which have a similar behavior within the same "fractal of Price" which IMHO is a refinement of Hurst's concept of "Commonality"

Tim Kruzel Notes were from almost the beginning the CORE of ALL systems issued from "Murrey Maths" and available on forums.

The "Book" of Murrey (which is not a book) is not so structured

Kruzel had the book - and was a member of the forum where "Murrey Maths" were discussed

Kruzel send the "notes" to Murrey with a "cover" mail . The content of the mail was roughly " I made a résumé of your chaotic writings to simplify and structure your thoughts and writings. Could you confirm me that I am right ?"

It was more diplomatically said - but that was the basic idea

Let's talk now about the Phase of Transition between 2 adjacent "Fractal of Price".

As you can notice in the Table, the first "Fractal of Price" goes from 0 to 10 with an Octave of 10 / 8 (1,25), the following fractal goes fom 0 to 100 and includes the first one.

BUT if you look attentively you see that in the second fractal the First 1/8 th Interval goes from 0 to 12.5 and that this Interval includes the WHOLE preceding Fractal (0-10) but goes further from 10 to 12.5.

This Extension or Gap is a Phase of Transition (hesitation) Zone.

If Price goes slightly above 10 you do not know if Price will go over 12.5 and penetrate decisively in the second interval of the Fractal (0-100) up to 25 (and above) or if Price will go back and reintegrate the first Fractal (0-10)

This explain why for each Fractal of Price you have a Phase of Transition between 2 adjacent Fractal of Price whose amplitude is equal to 1/4 of the previous Fractal of Price.

This Phase of Transition can also be described as an Hesitation Zone

DAX Envelopes Parameters : 62.5 / 31.25 / 15.625

DAX Long position closed + 7 points

UNDERSTANDING THE FRACTALIZATION AND THE OCTAVE RELATIVITY

The best way to understand pratically how a Fractal of Price develops itself is to follow its path since its Initial Public Offering (IPO)

IPO are great ! you have all the data .

Our example will be Facebook.

Today Facebook Price Action fluctuates just under 187,50.

Then can not be reputed being in the Fractal of Price 0/100, not even 0-125

Then Facebook will be reputed to fluctuate within the Fractal of Price 0/1000. The Major Octave will be 1000/8 = 125

But everybody can observe that this graph shows us no useful informations.

Then we obviously have to use an intermediary "Fractal" - an "operative" Fractal of Price

Visually the Fractal 0-250 seems a good candidate. This "operative Fractal" has a "heighth of 2 Major Octaves = 2 x 125

Then the Oerative Octave is 250 / 8 = 31,25

As for now Facebook Price Action fluctuates sllightly under 187,50

187,5 is the Support & Resistance Line (SRL) (6/8) in red whose Properties are Pivot & Reverse - it is a strong Resistance

As you can observe the Chart has be divided in 4 parts . It could have been more , but let us be simple to understand the process and its development.
Facebook IPO was 37.5 $ (a little more - but we will say 37.5 for the beauty of the demonstration)

37.5 is above 12,5 , then at the time of the IPO (may 2012) we know immediately that Facebook Price Action will fluctuate within the Fractal of Price 0/100, with a maximum of 125 and that Facebook Octave is 100 / 8 = 12,5

Then we know that Facebook Price Action can go :

- Down to 0 - with significant Resistance at 25 and 12,5
- Up to 100 or 125

obviously we do not know yet if these targets will be reached and when

If Price Action goes Up we know that our Risk Reward is

a) 62.5 / 37.5 = 166 %
b) 62,5 + 25 = 87.5 / 37 .5 = 233 %

You can observe that Facebook Chart has been divided in 4 parts numbered 1 to 4

As Facebook IPO was 37.5 we have choosen as its first "operative Fractal of Price" the Fractal 0/62.5 (noted 1) whose Octave is 62.5 / 8 = 7,8125

As soon as Facebook Price Action broke 62.50 ( the Support & Resistance Line (8/8) of the Fractal 0/62.5) then Facebook enter in a new Fractal of Price (noted 2) (0/125) whose Octave is 125 / 2 = 15.625

Time goes on but Price Action does not break 125 - so we keep the Fractal of Price 0/125 but double its area up to June 2016

Then when shortly after June 2016 Facebook Price Action breaks 125 we double then the Fractal of Price up to 250 and the area up to 2020

My experience is that you cannot Analyze and Trade ONLY with the Horizontal Lines = Support and Resistance Lines

It is better to add the Angles (Diagonal Lines) which gives additional information on Trend, Speed and Acceleration

Here the Angles chart of Facebook shows that Price Action follows very closely the (1x1) Angle ( 1 Price Unit x 1 Time Unit) whose Gann tells us that it is "the most important Angle" " the place where Time and Price "squares" (are balanced)

On the Facebook Angle chart you can observe that :

- very shortly after its IPO Facebook Price Action fluctuates within the Ascending Hesitation Zone (in light green) limited by the (3/4) and (4/3) Angle
- the area (in dark green) above the (1x1) Angle (in blue) and under the Price Action and the area (in rose) under the (1x1) Angle (in blue) and the Price Action are more or less equivalent

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