Disliked{quote} Thanks for the detailed writeup on this issue, and the lesson! I read Profit Magic recently and then again chapter 6, and while it doesn't come right out and answer my question, in retrospect the answer is fairly self-evident. {quote} So I think in this case parisboy eclipses Hurst by adding a logical explanation that is also practical in nature and will apply in most cases. It's essentially, after a top is confirmed to be in by way of a focal point convergence, it's more likely that price will continue going toward the bottom as...Ignored
it is a kind of "pattern recognition" case.
You just need :
a) to determine the pattern(s) when the methodology 99 % work
b) hence by prolonging the various moving averages you can before their crossing determine a prediction area where the Centered Moving Averages should cross
c) consequently you can also determine a provisional prediction area for the swing Low or Top
d) as time flowing you can precise more and more your prediction areas
Hurst tells us that :
When 2 (or more) Centered Moving Averages whose period are related by a factor 2 crosses with Price in the middle of the present swing, it is already too late to define a target price and a Prediction Area. Price Action is already at the top or at the Low.
Hence you can confirm in hindsight your Top or your Low
a) as described you can anticipate crossing and Prediction Area. Taking into account the estimated Amplitude of the swing , given by the Envelopes, you can decide to enter or not on the way.
b) if you do not enter having estimated your Risk reward ratio being too Low, you just have to play the next step.
After a Low Trend is UP
After a Top Trend is down