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Analysis and Trading based on Envelopes, Waves, Cycles

  • #3,701
  • Jul 20, 2020 4:53pm Jul 20, 2020 4:53pm
Hi Parisboy,
Hope all is well for you & your family. Although I rarely post I am following along daily with the progress of you thread as I find it is one of only two that keeps my interest. Want mention the other interest peeker, but he is always moving a little too slow, but I believe he is a good pip gainer from the content of his thread. anyway, back to the topic of my post. Have a few questions when you have time to respond.

1. Would Moving Average Envelopes work as well as Envelopes? As you know with MT4 the Octave Value is unavailable for Envelopes & Moving Average & it appears the Octave Values are an important component of the Cycles. If I'm wrong, take me to school on this topic please.


2. I have PB_Cycles_V1.03 loaded on several charts with all the built in components, but there are some charts this indicator will only load 3 lines failing to load all the needed lines of the Envelopes, so on these charts I have either MA Envelopes, or the MT4 provided Envelopes, but again each is missing the Octaves. Does that really matter as when comparing the results of my charts to your charts, or even to OAPDave"s charts mine appear on the surface to be the same.

Just trying to make the Envelopes I have better if that is possible with MT4 & its somewhat limitations. Maybe its me with the limitations! Trying to learn.

Sohocool has created a great indicator with PB_Cycles_V1.03 & others he has created, but I am unable to get this indicator to load properly on some charts. Maybe Sohocool will see this & weight in with some advice on what I may be doing wrong.

What about your views on using the indicator TMA +CG Mladen NRP indicator. This indicator allows the levels of 256, 128 & 32 to be inputted in the indicator?
The cycles from this indicator appear to be close to those of the MA's & Envelope, but not seeming to fit as tight as they should. In my view anyway.
All new traders should start on page one of you thread & dig in to every nugget you & others are sharing about Hurst. I had a conversation with someone that knew Hurst & had a copy of the course he created. According to this trader Hurst was far ahead of his time when it came to cycles & trading cycles.

The core of my trading method comes from nuggets I found from reading everything I could that was posted by Trader Crucial Point. Some say he was nuts, some say full of himself & some I think discovered a nugget, or two that they are trading with today. My discovery improved my trading by well over 50% with no standard indicators needed. I think his post had hidden valuable information, but very encrypted.

The information you & others are sharing is priceless especially to a new trader before he/she can get hooked on the indicator craze. Nothing against those trader developed indicators such as Sohocool has coded. In fact I have great admiration for those that have that skill. Anyway enough about indicators.

I want to devote more time & funds to trading the Hurst way as your sharing on you great thread, but want to make sure its being done correctly.

Looking forward to your response & I do hope I've not cluttered you great thread with time wasting questions & comments.

Thank you & best of trades to you, OAPDave, Sohocool & the other great contributors to your thread.

____________________________________________________________________________________________________
  • #3,702
  • Jul 20, 2020 5:57pm Jul 20, 2020 5:57pm
Quoting parisboy
DAX 5 mn Once you have confirmed a Low or a Top , Price Action has 2 options : a) enter in a Range b) Reverse the previous Trend then you can follow the Reversal Trend {image}
In what way does the focal point:

b) confirm (momentarily) price action will not go higher or lower.
  • #3,703
  • Jul 20, 2020 6:27pm Jul 20, 2020 6:27pm
https://www.tradingview.com/x/y4B7ZTUo/

Would this be considered could analysis of the 3 degrees of VTL's

Ive indicated witch ones are of what degree of envelope limits have been broken.

To me this seems to have many buy signals.

Just want to hear thoughts on its accuracy and if there could be a more accurate way of approaching
  • #3,704
  • Jul 20, 2020 8:07pm Jul 20, 2020 8:07pm
Looked like a textbook break of trendline and test off middle average in uptrend.
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  • #3,705
  • Jul 21, 2020 4:58am Jul 21, 2020 4:58am
Quoting kaihkaih
https://www.tradingview.com/x/y4B7ZTUo/ Would this be considered could analysis of the 3 degrees of VTL's Ive indicated witch ones are of what degree of envelope limits have been broken. To me this seems to have many buy signals. Just want to hear thoughts on its accuracy and if there could be a more accurate way of approaching
VTL's link 2 successive Tops or Lows of the same nature
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  • #3,706
  • Jul 21, 2020 8:14am Jul 21, 2020 8:14am
Attached Image (click to enlarge)
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  • #3,707
  • Jul 21, 2020 8:22am Jul 21, 2020 8:22am
Quoting FXEZ
Looked like a textbook break of trendline and test off middle average in uptrend.{image}
Milking the chart
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  • #3,708
  • Jul 21, 2020 8:45am Jul 21, 2020 8:45am
Quoting acetrader
Hi Parisboy, Hope all is well for you & your family.

Sohocool has created a great indicator with PB_Cycles_V1.03 & others he has created, but I am unable to get this indicator to load properly on some charts. Maybe Sohocool will see this & weight in with some advice on what I may be doing wrong.. Thank you & best of trades to you, OAPDave, Sohocool & the other great contributors to your thread. ____________________________________________________________________________________________________
Ace I am fine for now. I hope you too.

Only Sohocool can answer to your question. Ask him
  • #3,709
  • Jul 21, 2020 8:53am Jul 21, 2020 8:53am
Quoting acetrader
Hi Parisboy

What about your views on using the indicator TMA +CG Mladen NRP indicator. This indicator allows the levels of 256, 128 & 32 to be inputted in the indicator? The cycles from this indicator appear to be close to those of the MA's & Envelope, but not seeming to fit as tight as they should. Thank you & best of trades to you, OAPDave, Sohocool & the other great contributors to your thread. ____________________________________________________________________________________________________
Some generalities :

First, I have never used MT4 . Hence I have no opinions about EA's, indicators in MT4 etc.

I do not know the MLaden NRP inicator. I will try to check. I stumbled upon MLaden some years ago ,researching about Murrey Maths I assume. IMHO Mladen is more focused on programming than on trading

The cycles from this indicator appear to be close to those of the MA's & Envelope, but not seeming to fit as tight as they should.

Ace if you posted both kind of charts, may be I could give you an educated opinion on this Cycles subject
  • #3,710
  • Edited 10:16am Jul 21, 2020 9:07am | Edited 10:16am
Quoting acetrader
Hi Parisboy, 1. Would Moving Average Envelopes work as well as Envelopes? As you know with MT4 the Octave Value is unavailable for Envelopes & Moving Average & it appears the Octave Values are an important component of the Cycles. If I'm wrong, take me to school on this topic please.

2. I have PB_Cycles_V1.03 loaded on several charts with all the built in components, but there are some charts this indicator will only load 3 lines failing to load all the needed lines of the Envelopes, so on these charts I have either MA Envelopes, or the MT4 provided Envelopes, but again each is missing the Octaves. Does that really matter as when comparing the results of my charts to your charts, or even to OAPDave"s charts mine appear on the surface to be the same.


Thank you & best of trades to you, OAPDave, Sohocool & the other great contributors to your thread. ____________________________________________________________________________________________________
same answer as in the previous message could you post charts of what you call a "Moving Average Envelope" and an " Envelope"

The Octave Value is IMHO NOT an important component of the Cycles, at least not directly.

The Octave Value is what allows you to build rationally and in a simple mannerefficient Envelopes. By "efficient Envelopes" I mean envelopes which generate enough tradable contact points (tops and lows). This allows you to identify more easily theDominant Cycles period, to classify and hierarchize Cycles, Waves, Swings and to build Valid Trend Lines linking 2 Lows or 2 tops of the same nature.

This said the Envelope Analysis methodology is the same whatever the way you build your Envelopes as long as you generate enough useful contact points
  • #3,711
  • Edited 9:30am Jul 21, 2020 9:13am | Edited 9:30am
Quoting acetrader
Hi Parisboy, 2. I have PB_Cycles_V1.03 loaded on several charts with all the built in components, but there are some charts this indicator will only load 3 lines failing to load all the needed lines of the Envelopes, so on these charts I have either MA Envelopes, or the MT4 provided Envelopes, but again each is missing the Octaves. Does that really matter as when comparing the results of my charts to your charts, or even to OAPDave"s charts mine appear on the surface to be the same.
d. ____________________________________________________________________________________________________...
Ace as you I have the same problem sometimes - it just that the amplitude (= 2 Octaves) of your Envelope(s) is too large. Hence you only see on your chart the Centered Moving Averages used to build the Envelopes.

By construction Centered Moving Averages are in the center of Price Action.

That is why you see them on your screen
Attached Image(s) (click to enlarge)
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  • #3,712
  • Jul 21, 2020 10:16am Jul 21, 2020 10:16am
Quoting acetrader
Hi Parisboy, Hope all is well for you & your family. Although I rarely post I am following along daily with the progress of you thread as I find it is one of only two that keeps my interest. Want mention the other interest peeker, but he is always moving a little too slow, but I believe he is a good pip gainer from the content of his thread. anyway, back to the topic of my post. Have a few questions when you have time to respond. 1. Would Moving Average Envelopes work as well as Envelopes? As you know with MT4 the...
Hi Acertrade,

i hope you are well,

Do you speak about this indicator ??

https://www.forexfactory.com/showthr...6#post12695676

KISS&V :Keep it simple safe & visual
  • #3,713
  • Jul 21, 2020 10:20am Jul 21, 2020 10:20am
Eurusd 5M

Parisboy envelopes(-16) with Heiken Ashi(-16) and FLD 32 ("+16").

Attached Image (click to enlarge)
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KISS&V :Keep it simple safe & visual
  • #3,714
  • Jul 21, 2020 1:24pm Jul 21, 2020 1:24pm
Quoting Sohocool
Eurusd 5M Parisboy envelopes(-16) with Heiken Ashi(-16) and FLD 32 ("+16"). {image}
just an idea,,,,use the inner channel as price and keep the 2 outer channels

price = 5min
inner channel = 15 min
outer channel = 1hr
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  • #3,715
  • Jul 21, 2020 1:48pm Jul 21, 2020 1:48pm
this picture tells me a lot
if only you knew the meaning of the channels etc
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  • #3,716
  • Jul 21, 2020 2:50pm Jul 21, 2020 2:50pm
Quoting parisboy
{image}
THanks so much I can see the difference in the points that make the true vtl.

Appreciate all the wisdom.
  • #3,717
  • Jul 21, 2020 3:23pm Jul 21, 2020 3:23pm
Parisboy,

Thank you for your answers. Will post up some charts with a description for the Envelopes as to if they are MA's, actual envelopes, or the Mladen creation. Yes Mladen is a very talented coder/programmer. Not sure about his trading skills. When you have the time if you desire to take a look at Cycle/Envelope indicators by Nih98 at Forex factory. Also a NRP (Non Repainter) if I remember correctly. All is well with me thank you!
  • #3,718
  • Jul 21, 2020 3:28pm Jul 21, 2020 3:28pm
Quoting Sohocool
{quote} Hi Acertrade, i hope you are well, Do you speak about this indicator ?? https://www.forexfactory.com/showthr...6#post12695676
Hi Sohocool,
All is good with me. Thank you. I hope your doing well. This is the indicator I was speaking of. Very nice indicator, but unable to get it to load properly on some charts. Probably something I am doing incorrectly. You advice would be most appreciated.
  • #3,719
  • Jul 22, 2020 5:29am Jul 22, 2020 5:29am
Quoting FXEZ
{quote} In what way does the focal point: b) confirm (momentarily) price action will not go higher or lower.
The "Focal Point" is the name given by Jim Tillman to a confluence of multiple Centered Moving Averages related together by a factor 2 for their periods.

You can also use the term of "Node"

Let's use the chart as an example .

Assume Top 1 is at 5000 points
Assume Focal Point converge towards 4800 points

According to the methodology / theory Price Action bearish Swing Amplitude will be :

Top - Focal Point = 5000 - 4800 = 200

Bearish Swing Amplitude =(2 x 200) +/- 10 %

Hence your Potential Target Zone will be located at 5000 - 400 +/- 40
Then between 4640 and 4560

When Price Action enter in this Zone you can suspect your Low is building

As soon as you notice confirmation of Reversal signals

- your Low is building on or near a Lower Limit of an Envelope
- Heikin Ashi Candle go from bearish rred to bullish green

hence you can suspect a change in trend ( a range or an uptrend) and consider opening a Long position
m
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  • #3,720
  • Edited 7:58am Jul 22, 2020 5:44am | Edited 7:58am
Quoting FXEZ
{quote} In what way does the focal point: b) confirm (momentarily) price action will not go higher or lower.
Do your homework : read, study and practice Hurst ! Then comb the thread.

Profit Magic : Chapter 6 - pages 97 - 107


HOW TO CONSTRUCT AND USE HALF-SPAN MOVING AVERAGES


Valuable information is available each time a Moving Average with span equal to
one-half the duration of the trading cycle changes direction !

Let us examine this characteristic of Moving Averages in connection with the nature of the price-motion model to see why this is so.

From Chapter Three and from the Appendix, the characteristics of Moving Averages are summarized as follows:

The span of a Moving Average is the length of time over which data is summed to obtain the Moving Average.

For example, a 30-week Moving Average consists of 1/30th of the sum of the weekly closing prices of a stock for the last 30 consecutive weeks.

The span of this average is therefore 30 weeks.

A Moving Average 'lags" the data it smooths by one-half of its span.

Thismeans that if the average is to represent a time-synchronized, smooth version of the data, the fast computed point of the average must be plotted onehalf span behind the last available data point.

Thus, the last available point of a 30 week Moving Average is plotted between the 15th and 16th weeks behind the last closing price of the stock.

A Moving Average reduces precisely to zero the presence and magnitude of any cyclic component with duration exactly equal to the span of the average.

All shorter duration components are drastically reduced, but may show some sign of their presence.

Alllonger duration components are definitely present. The longer the duration, the more completely the full magnitude of the component comes through.

Now assume we have a stock in which a dominant component has been identified with an average duration of 20 weeks.

A Moving Average with a span of one-half of this, or 10 weeks, is constructed.

The lag of this average is one-half of its span or five weeks.

Thus, when this average "tops out" and turns down, the 20-week trading cycle has signalled a turnover at this point, but the price of the stock itself has been going down for 5 weeks already !

Remembering that it is the 20-week component that caused both the 10-week average and the stock price to top out, it is seen that the total downward move due to this component is just one-half complete at this time.

All of thisoccurs because the 10-week average will kill all price fluctuations of exactly 10 weeks in duration and drastically reduce all shorter ones.

Since the 20-week motion will come through at nearly full strength, the 10-week average will only change direction when the 20 week cycle causes it to do so.

Then the 5-week lag is precisely the time required for the 20 week cycle to drive prices half as far as the 20 week cycle is going to carry them.

Similarly, when the 10-week Moving Average bottoms out, the stock has already been rising for 5 weeks-and is half as far up as the 20-week cycle is going to drive it.

This quality of a half-span Moving Average can only work, of course, if the price motion model is a correct representation of stock price fluctuations. That it does
work-time after time-is very powerful evidence indeed for the validity of the model.

Let's list in order what must be done to make use of this timing aid :

Use a quick and rough envelope analysis to establish the average duration of a dominant cyclic component on which you wish to trade.

Construct a Moving Average of the closing prices of the stock which has a span equal to half the average duration of the trading cycle. If this comes out to be a fraction, round it off to the nearest whole number.

Plot the Moving Average on the samechart used for the stock, taking care to lag the average onehalf its span behind the stock data.

When the average reverses its direction to the downside note the price of the stock and how much it has alreadymoved down.

You may expectthe downtrend to continue until the stockhas moved down this much more.

Reverse this process for Moving Average reversals to the upside to establish how much further up the stockwill go.

The accuracy of this process can be further improved by the use of 2 moving averages.

Proceed as before but compute and plot not only the half-span average, but the Moving Average whose span is equal to the average duration of the trading cycle as well.

For the example used above, the trading cycle duration is 20 weeks.

The halfspan Moving Average is a 10-week one.

The full-span Moving Average is a 20-week one.

Now let's see why this is of aid.

The half-span average tops out when the stock price has dropped 50% of the
20-week fluctuation amount.

This means that the stock price is right in the middle of the channel enclosing the 20 week cycle at this particular time.

On the other hand, the 20-week Moving Average is always in the middle of the 20-week channel (theoretically).

Remember, the 20-week average reduces the 20 week cycle to zero.

Thusthe 20-week average represents the sum of all components of duration longer than 20 weeks, which is exactly the import of the center line of the 20-week channel !

The 20-week average also drastically reduces the size of all shorter duration components, allowing only small percentages of these to "leak" through - and these are easily recognizable and graphically smoothed.

Now when your 10-week average tops out, you can extrapolate both the ten- and 20-week averages through their lag periods up to current time.

This is quite simply accomplished for the 20 week average especialy, since it is so "smooth."

Note the price level at which the stock, the 10-week Moving Average extrapolation, and the 20-week Moving Average extrapolation meet.

Subtract this from the previous peak of the current move down.

This is your estimate of how much further down the stock will go. A tolerance of 10% should be allowed for the total move estimate.

As with all of the techniques discussed in this book, you should never rely on this
estimate alone.

But combined with the others, this method provides powerful confirmation of the validity of action signals.

Let's see how it works by example.

Figure VI-l is a partial replot of the data on Alloys Unlimited used asan example
in Chapter One.

This stock displays a dominant component in this time period that ranges from 17 to 22 weeks in duration. For the sake of computational simplicity we will assign it ( asour trading cycle) an average duration of 20 weeks.


We need therefore a ten-week (half-span) and a 20-week (full-span) Moving Average. The plot is presented just asa decision point is reached-the ten-week Moving Average has just bottomed out.

We note and smooth a remnant of a 12-week component from the 20-week moving average. The result is shown in the plot as a dashed line.

We extrapolate both the 10- and 20 week averages to current time. These meet the stock price at 41. The stock has already moved up from 32, a total of 9 points.

We expect it to continue another 9 points from 41 -to 50. The total move predicted is 18 points. The tolerance is 10% of this amount, or approximately 2 points.

We therefore predict that this 20 week cycle will carry prices to between 48 and 52 !

If we had purchased the stock on this type of criteria, coupled with any or all of the forms of graphical analysis we now know about, the resultant conclusion is that we should hold the stock for a move of about 9 more points.

Further, any time the stock enters our prediction area, we are alerted that we should be setting up and using terminal sell signal procedures !

Figure VI-2 shows what the stock did
It entered the tolerance zone eight weeks later and topped out at 48.75 ! The sell signal generated here would also constitute a sell-short signal.

With the 20 week Moving Average trending upward in this issue, better vehicles could be found for a short transaction.

However, just to follow along with our new technique, suppose we both sold and sold-short Alloys Unlimited at this point around 47 or 48.

How would we have fared ?

Figure VI-3 shows the same stock 3 weeks later.

Prices have declined to the neighborhood of 42 and we have a 5- to &point profit. Should we take our profit here ?

Well, we note also that the ten-week Moving Average has just topped out.

Let's estimate how low we expect the stock to go. Extrapolating both the 10- and 20-week averages results in an intersection with stock prices at 42.

The stock topped out at 48.75 or 7 points higher. We expect it to go 7 points lower, to about 35.

The total move anticipated is 14 points, providing a tolerance of about 51.50 points.

We predict the stock will continue to drop to the region of 33.50 to 36.50.

The signal we've generated is "hold !"

Figure VI-4 shows what the stock did.

The price entered the prediction zone 4 weeks later, and bottomed out at 35.125 ! Once again we could use our cover-short signal at these levels as a buy signal.
Let us assume that we did so, covering our short sale and buying into the stock in the neighborhood of 37 (which we could have done any time within a 5-week interval!).

Figure VI-5 shows the following action just as the 10-week average bottoms out.


A Halfspan Average "Hold Long"Signal
Extrapolation of the averages results in intersection with the stock price at 43.75. The stock has moved to this price from 35.125, or 8.625 points. We anticipate a further move of this amount to 43.75 + 8.625 = 52.375. As usual, we put a tolerance of 10 % of the total move about this price to get a zone of 50.625 to 54.125 with the target price of 52.375.

As Figure VI-6 shows, the price of the stock rocketed into this zone the following week, remaining there for three weeks (plenty of time to get out using graphical methods and daily charts). The actual top-out price was 52.875 !


The Resulting "Sell" And Sell Short" Signal

This sell signal is, of course, also a sell-short signal.

Suppose we had sold here and sold short at 51 to 52.

Figure VI-7 shows the next reversal of the 10-week Moving Average.

A Half-Span Average Hold Short" Signal

On this transaction, prices have oscillated wildly between 44 and 51 for 9 weeks. We are somewhat concerned about our transaction, and wish to know whether or not we should cut and run!

Extrapolation of averages provides intersection at 46.75. This is 6.125 points below the preceding peak. Prices should go down to 40.625, 21.25, or into a zone from 39.375 to 41.875. The stock entered this zone 2 weeks later and bottomed out at 41 !

This simple computational technique is one of the most powerful timing tools in your arsenal. It will not always provide as much information as in this example, but it
should be the fust computational technique you use as a backup to other methods.

As usual, the whole armory of defensive techniques (trailing loss levels, etc.) should be employed to guard against the unexpected - which does occur occasionally.

But, properly used, it can add materially to your confidence in making buy and sell decisions.

Best of all, it is not an empirically derived method, but is solidly based on the existence and nature of the price-motion model!

NEVER FORGET THAT HURST WHEN PRODUCING THESE CHARTS HAD NO ACCESS TO A PERSONAL COMPUTER, AND HIS READERS AND CUSTOMERS LESS AGAIN
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