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Analysis and Trading based on Envelopes, Waves, Cycles

  • #1,921
  • May 23, 2019 4:46pm May 23, 2019 4:46pm
Alain
Ok I went with 6.25 3.125 1.5625 used my eye for that.
The chart I am showing is with your setting plus a horizontal Grid of 150 & 130
Thanks as always
Dave
Attached Image (click to enlarge)
Click to Enlarge Name: GBPJPYDailyc.png Size: 106 KB
  • #1,922
  • May 23, 2019 4:49pm May 23, 2019 4:49pm
Quoting OAPDave
Hi Alain Assuming my envelopes look ok what overall grid would you set for this Gbp/Jpy Daily Chart ? Thanks Dave {image} {image}
Price Range = 196 - 116 = 80

Octave = 80 / 8 = 10

Envelope 256 TU parameter = 2 x 10 = 20
Envelope 128 TU parameter = 20 / 2 = 10
Envelope 32 parameter = 10 / 2 = 5

Baseline (0/8) = 116
Ultimate Resistance (8/8) = 196
Center of Gravity (4/8) = 156
Attached Image (click to enlarge)
Click to Enlarge Name: GBPJPY 5 YEARS PARAMETERS 20 - 10 - 5.png Size: 4.8 MB
  • #1,923
  • May 23, 2019 5:12pm May 23, 2019 5:12pm
Quoting parisboy
{quote} Price Range = 196 - 116 = 80 Octave = 80 / 8 = 10 Envelope 256 TU parameter = 2 x 10 = 20 Envelope 128 TU parameter = 20 / 2 = 10 Envelope 32 parameter = 10 / 2 = 5 Baseline (0/8) = 116 Ultimate Resistance (8/8) = 196 Center of Gravity (4/8) = 156 {image}
Not got this one correct
251 117 = 134/8 = 16.75
33.5
16.75
8.375
Attached Image (click to enlarge)
Click to Enlarge Name: GBPJPYWeekly.png Size: 89 KB
  • #1,924
  • May 23, 2019 5:16pm May 23, 2019 5:16pm
Quoting OAPDave
{quote} Not got this one correct 251 117 = 134/8 = 16.75 33.5 16.75 8.375 {image}
Dave it seems ok

what do you mean by "correct"

with your parameters you can have the same results when analyzing and use the same concepts and tools for trading
  • #1,925
  • May 23, 2019 5:26pm May 23, 2019 5:26pm
Quoting parisboy
{quote} Dave it seems ok what do you mean by "correct" with your parameters you can have the same results when analyzing and use the same concepts and tools for trading
Another one of those light bulb moments
Thanks my friend
Dave
  • #1,926
  • May 23, 2019 5:30pm May 23, 2019 5:30pm
Quoting OAPDave
{quote} Another one of those light bulb moments Thanks my friend Dave

I will elaborate later on the subject. Have a good night.
  • #1,927
  • May 24, 2019 3:26am May 24, 2019 3:26am
Morning Alain
Just for fun I have taken the May H & L applied the maths and this is the result so far ?
Attached Image (click to enlarge)
Click to Enlarge Name: GBPJPYH1a.png Size: 100 KB
  • #1,928
  • May 24, 2019 5:30am May 24, 2019 5:30am
Attached Image (click to enlarge)
Click to Enlarge Name: DAX 55 24 MAY 2019.png Size: 1.0 MB
  • #1,929
  • Edited 4:59am May 25, 2019 4:10am | Edited 4:59am
Quoting OAPDave
{quote} Another one of those light bulb moments Thanks my friend Dave
Hi Dave

I will try to summarize my thoughts on " Gann / Murrey (horizontal) Lines"

understanding the historical process is good to determine what is key and what is secondary.

A) Gann divided a Price Range, whatever Price Range by 8 - more precisely Gann used the price Range between a Low and a Top. Gann draws 8 Horizontal Lines dividing the Price Range. We will note this tool as Gann Lines version 1.0

At this point parisboy introduced the concept of Tops and Low of the same order, degree, magnitude. This concept is subliminally included in Gann and everyone practice. But I rationalized and systematized this concept.

With the time going, Gann found that Gann Lines version 1.0 had some inconvenients , every Price Action generated a new Low or a new Top outside the Price Range used, you had to redraw your chart.

Remember that Gann could not used computers with graphical possibilities. Everything was done per hand on graph paper with a pencil and a rubber !

B) IMHO it was that which stimulated Gann to develop the Gann Lines version 2.0. In this version simplified and normalized the process. Gann referred to the basic scaling used for charting on graph papers and for the graphs publised in financial newspapers.

According to Bonnie Hill this version Gann Lines 2.0 was used by Gann years before his death.

This version practically uses a normalized scale (Price Range) and the properties of Fractalization or Autosimilarity

The Price Range, goes from 0 to 10 , 0 to 100, 0 to 1000 etc and you divide this normalized Price Range by 8

This is this version Gann Lines version 2.0 which T.H. Murrey popularized under the name of "Murrey Maths"

It is important to note that there is (to my knowledge) no public papers of Gann about "Gann Lines" on the theoretical point of view, no trading papers about the use of Gann Lines for trading similar to what Gann published on Gann Angles.

It is amusing or challenging to note that Gann published a leaflet on Gann "Angles" = the Diagonal Lines which he considered the least important of the 3 "Lines" he used:

- The Horizontal Lines
- The Vertical Lines
- The Diagonal Lines

and that Gann published nothing on the use of Horizontal and Vertical Lines and this in spite of the fact that Gann considered Horizontal (Price) and Vertical (Time) Lines more important than the Diagonal Lines (Speed, Acceleration)
Attached Image(s) (click to enlarge)
Click to Enlarge Name: GANN VERSION 1.0 DIVISION BY 8.jpg Size: 26 KB
Click to Enlarge Name: GANN ANGLE ORIGINAL SHEET 45°.jpg Size: 172 KB
Click to Enlarge Name: STRUCTURE FRACTALIENNE DU TEMPS ET DES PRIX.png Size: 891 KB
  • #1,930
  • May 25, 2019 5:44am May 25, 2019 5:44am
Quoting OAPDave
{quote} Another one of those light bulb moments Thanks my friend Dave

The advantage of Gann version 2.0 relatively to Gann version 1.0 is :

a) this version is more "stable" because you do not have to use a new scaling (Price Range) whenever Price Action generates a new Low or a new Top
b) you can better visualize, then understand, the evolution of of the Fractal of Price
c) you can create " Groups" of financial instruments fluctuating within the same normalized Price Range 0-10,0-100 , 0-1000 or whatever
then you can compare these financial instruments belonging to the same Groups, see the differences or the commonality
  • #1,931
  • May 25, 2019 3:07pm May 25, 2019 3:07pm
Quoting parisboy
{quote} I will elaborate later on the subject. Have a good night.
ALLIANZ and MUENCHEN RUECK belong both to the Price Range Group (Fractal of Price ) 0-375

see the commonality in their behaviour
Attached Image (click to enlarge)
Click to Enlarge Name: ALLIANZ + MUENCHEN RUECK SRL 2000-2024.png Size: 3.1 MB
  • #1,932
  • May 26, 2019 1:45pm May 26, 2019 1:45pm
Quoting parisboy
{quote} Hi Dave I will try to summarize my thoughts on " Gann / Murrey (horizontal) Lines" understanding the historical process is good to determine what is key and what is secondary. A) Gann divided a Price Range, whatever Price Range by 8 - more precisely Gann used the price Range between a Low and a Top. Gann draws 8 Horizontal Lines dividing the Price Range. We will note this tool as Gann Lines version 1.0 At this point parisboy introduced the concept of Tops and Low of the same order, degree, magnitude. This concept is subliminally included...
Alain
I do understand what you are pointing out and it does make complete sense, but leaving horizontal lines alone for a while I have become very interested on how you approach your envelope sizing I have done a little exercise with the Gbp Usd using what I think is the all time High & Low and found the numbers come out remarkably close to some familiar numbers to me
High 2.1162 Low 1.1452
Actual Familiar
Orange Envelope 15.536 15.625
Blue Envelope 7.7768 7.8125
White Envelope 3.884 3.90625
Not sure what I should have set the 4th Envelope to, so just left it the same as white and divided it by 2, 1.942 (yellow) familiar 1.9531
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDSBDaily.png Size: 98 KB
  • #1,933
  • Edited 4:11pm May 26, 2019 3:04pm | Edited 4:11pm
Quoting OAPDave
{quote} Alain I do understand what you are pointing out and it does make complete sense, but leaving horizontal lines alone for a while I have become very interested on how you approach your envelope sizing I have done a little exercise with the Gbp Usd using what I think is the all time High & Low and found the numbers come out remarkably close to some familiar numbers to me High 2.1162 Low 1.1452 Actual Familiar Orange Envelope 15.536 15.625 Blue Envelope 7.7768 7.8125 White Envelope 3.884 3.90625 Not sure what I should have set the 4th Envelope...
Dave,

a key point is to understand that there is no "correct" parameters

Hurst when he built his first envelopes asked his readers and clients to use a paper band to build their envelopes ! At the time there was no personal computers for anybody. People had only graph paper, pencils and rubber at their disposal.

The general idea is that the Envelope which has the greatest amplitude includes most of the data points (your personal choice about what you understand as "most of")

Brian Millard used reklatively sophisticated mathematics to create such Envelopes. My methodology is explained at length on this thread. How and why.

Your parameters Dave are those which could have been used by Gann himself - Price Range between the all Time High and Low

IMHO Intutively there should have been no differences for the Analysis, and for Trading the differences should go from marginal to negligible.

Anyway it is excellent and stimulating to experiment. Then you will build trust in the methodology and your parameters
  • #1,934
  • May 26, 2019 3:31pm May 26, 2019 3:31pm
Quoting parisboy
{quote} Dave, a key point is to understand that there is no "correct" parameters Hurst when he built his first envelopes asked his readers and clients to use a paper band to build their envelopes ! At the time there was no personal computers for anybody. People had only graph, paper, pencils and rubber at their disposal. The general idea is that the Envelope which has the greatest amplitude includes most of the data points (your personal choice about what you understand as "most of") Brian Millard used reklatively sophisticated mathematics to create...
Alain
You once mentioned that on occasions you might look at 4 Envelopes, what would the parameters be for the 4th
256 -16
128 -16
32 -16
?

Dave
  • #1,935
  • May 26, 2019 3:40pm May 26, 2019 3:40pm
Quoting OAPDave
{quote} Alain I do understand what you are pointing out and it does make complete sense, but leaving horizontal lines alone for a while I have become very interested on how you approach your envelope sizing I have done a little exercise with the Gbp Usd using what I think is the all time High & Low and found the numbers come out remarkably close to some familiar numbers to me High 2.1162 Low 1.1452 Actual Familiar Orange Envelope 15.536 15.625 Blue Envelope 7.7768 7.8125 White Envelope 3.884 3.90625 Not sure what I should have set the 4th Envelope...
Dave, you have to notice that Murrey and followers assign a "weight" and / or a precise signification to each Gann / Murrey Horizontal Line. To my knowledge nobody has ever given a rational explanations to the signification of these Lines.

It is obvious that the First (0/8) and the Last Lines (8/8) play a significant role within the Fractal of Price.

If Price Action fluctuates ABOVE the (8/8) Line, we enter a new Fractal of Price of Higher Degree . The Octave is X 2 (DOUBLING)

If Price Action fluctuates UNDER the (0/8) Line, we enter a new Fractal of Price of Lower Degree . The Octave is divided by 2 (HALVING)
Attached Image
  • #1,936
  • May 26, 2019 3:56pm May 26, 2019 3:56pm
Quoting OAPDave
{quote} Alain You once mentioned that on occasions you might look at 4 Envelopes, what would the parameters be for the 4th 256 -16 128 -16 32 -16 ? Dave
Dave, I use 1536 Centered Moving Average to build the 4th Envelope.

It is related to the 6 Year Cycle which is one of the most common and important cycle according to Edward Dewey and the researchers ofthe Foundation for the Study of Cycles (FSC)

6 Year = 6 x 256 = 1536
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSD ENVELOPE 6 YEAR.png Size: 3.4 MB
  • #1,937
  • May 26, 2019 3:58pm May 26, 2019 3:58pm
Quoting OAPDave
{quote} Alain I do understand what you are pointing out and it does make complete sense, but leaving horizontal lines alone for a while I have become very interested on how you approach your envelope sizing I have done a little exercise with the Gbp Usd using what I think is the all time High & Low and found the numbers come out remarkably close to some familiar numbers to me High 2.1162 Low 1.1452 Actual Familiar Orange Envelope 15.536 15.625 Blue Envelope 7.7768 7.8125 White Envelope 3.884 3.90625 Not sure what I should have set the 4th Envelope...
Expansion of a Fractal of Price and of the parameters
Attached Image (click to enlarge)
Click to Enlarge Name: FRACTAL OF PRICE EXPANSION.png Size: 1.3 MB
  • #1,938
  • May 27, 2019 7:55am May 27, 2019 7:55am
Numerology of the Fractal of Price 0-100
Attached Image (click to enlarge)
Click to Enlarge Name: GANN NUMEROLOGIE FRACTALE DE PRIX 0-100.png Size: 463 KB
  • #1,939
  • May 27, 2019 8:10am May 27, 2019 8:10am
Attached Image (click to enlarge)
Click to Enlarge Name: DAX 55 27 MAY 2019.png Size: 1.0 MB
  • #1,940
  • May 27, 2019 8:24am May 27, 2019 8:24am
Hello,
Sorry to disturb you but i saw that you said that using enveloppes is much easier to identify waves and cycles in trading. Can you share the parameters to use please ?
THanks a lot,
Best regards,

One reader sent me this PM. My answer is "there is no free lunch" . You need to read the file and try to apply yourself the tools and concepts developed at length in this thread

hereunder a today's example of "Waves " (and Cycles ) using a DAX Chart 5 Days / 5 mn

I wait for your questions about Waves and Cycles
Attached Image (click to enlarge)
Click to Enlarge Name: DAX WAVES AND CYCLES 27 MAY 2019.png Size: 1.0 MB
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