Analysis and Trading based on Envelopes, Waves, Cycles | Page 367 | Forex Factory

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Attachments: Analysis and Trading based on Envelopes, Waves, Cycles
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Analysis and Trading based on Envelopes, Waves, Cycles

  • #7,321
  • Feb 20, 2022 4:04am Feb 20, 2022 4:04am
Quoting helioss
BTC 1 min, 128 loosing bearish strength.. {image}
Update
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  • #7,322
  • Feb 20, 2022 9:15am Feb 20, 2022 9:15am
Quoting acetrader
Hi Parisboy, Swede Dave & others, Would it be a correct statement to say that the CMAs would always work as they are constant by design unlike another indicator or method. I've heard traders (me included) say what worked last year is failing me this year. Methods, systems & strategies are constantly having to be retooled, but it seems CMAs are constant once you learn what they are showing you. It's like reading the tea Leafs as some would say. I still haven't learned, but it's a work in progress for me. What I discovered from OUR FRIEND CRUCIAL...
Good question Ace. The level of stupidity repeated by 99,99 % of traders about Moving Averages always amazed me since I discovered Hurst in 2006. I wrote " Moving Averages" because no one, outside me and some readers of this thread, use Centered Moving Averages.

The first common stupidity is : "it lags". In itself it is not a stupidity to say and write " Moving Averages lags." , even if almost nobody is able to explain precisely why Moving Averages "lag" .

Note the "lag" of a Moving Average is equal to 1/2 of its span.The "lag" of a 10 Days Moving Average is 5 Days.

The stupidity of "it lags' begins when guys writing 'it lags' let think subliminally that MA's are "late" and give you only "after the fact information"

It is absolutely true that MA's are not a crystal ball will not answer the question "does the market change direction tomorrow at 17.53 ?" ........ as the hundreds of indicators developed since 1960.

The good, never asked question, about MA's is what MA's can give us as useful informations for our trading ?

The same guys who told you "it lags" condescend to write " MA's show the trend ". Why ? What is a Trend - Mystery, fog, imprecision
  • #7,323
  • Edited 1:52pm Feb 20, 2022 10:21am | Edited 1:52pm
Let's us precise the "MA's show the trend" thing

Moving Averages are Low Bandpass Filters. This is so impresive a formulation that no one outside Hurst in Profit Magic has translated this expression in layman terms for the Dummies : you and me.

Let's assume you are an investor. What means for you to use a 1 Year Moving Average (256 Trading Days) ?

The 1 Year Moving Average :

a) eliminate in Price Action all frequency (Cycles) equal to 1 Year !
b) reduce greatly the influence of frequencies lower than 1 Year - for example 9 Months, 6 Months, 3 Months 6 Weeks, 3 Weeks etc

you can find traces of these frequencies in the MA 1 Year but only traces

c) let go through the frequencies (Cycles) greater than 1 Year - for example 18 Months, 3 Year 6 Years, 9 Years, 12 Years etc

Hereunder the Chart shows you the Centered Moving Average 1 Year of the GBPUSD (which is Swede's beloved pair)
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  • #7,324
  • Feb 20, 2022 10:45am Feb 20, 2022 10:45am
Hereunder the Chart shows you the Centered Moving Average 1 Year of the GBPUSD (which is Swede's beloved pair)

Technically ALL frequencies greater than 1 Year are summed up in this brown curve (the 1 Year Centered Moving Average)
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  • #7,325
  • Feb 20, 2022 10:53am Feb 20, 2022 10:53am
Do you understand what is a "smoother" ?

hereunder :

the 1 Year Centered Moving Average of the GBPUSD (brown)
the 3 Weeks Centered Moving Average of the GBPUSD (red)
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  • #7,326
  • Feb 20, 2022 11:17am Feb 20, 2022 11:17am
Do you understand how a 1 Year Centered Moving Average can be used as a Template to build an Envelope ?
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  • #7,327
  • Edited 1:51pm Feb 20, 2022 11:39am | Edited 1:51pm
Understanding the Cyclic Mode and the Trending Mode (John Ehlers)

The effect of the Underlying Trend

Hereunder GBPUSD Daily Price Action with Centered Moving Average 256 (brown)
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  • #7,328
  • Edited 11:53am Feb 20, 2022 11:42am | Edited 11:53am
Understanding the Cyclic Mode and the Trending Mode (John Ehlers)

The effect of the Underlying Trend - Up, Down or Flat : Neutral

We add the Centered Moving Average 128 (6 Months on the Chart)
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  • #7,329
  • Feb 20, 2022 11:44am Feb 20, 2022 11:44am
Understanding the Cyclic Mode and the Trending Mode (John Ehlers)

The effect of the Underlying Trend - Up, Down or Flat : Neutral

We add the Centered Moving Average 64 (3 Months on the Chart)
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  • #7,330
  • Feb 20, 2022 11:46am Feb 20, 2022 11:46am
Understanding the Cyclic Mode and the Trending Mode (John Ehlers)

The effect of the Underlying Trend - Up, Down or Flat : Neutral

We add the Centered Moving Average 32 (6 Weeks on the Chart)
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  • #7,331
  • Feb 20, 2022 11:49am Feb 20, 2022 11:49am
Understanding the Cyclic Mode and the Trending Mode (John Ehlers)

The effect of the Underlying Trend - Up, Down or Flat : Neutral

We add the Centered Moving Average 16 (3 Weeks on the Chart)
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  • #7,332
  • Edited 1:28pm Feb 20, 2022 12:51pm | Edited 1:28pm
Understanding the Cyclic Mode and the Trending Mode (John Ehlers)

The effect of the Underlying Trend - Up, Down or Flat : Neutral

Underlying Trend is Flat / Neutral
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  • #7,333
  • Edited 1:30pm Feb 20, 2022 12:56pm | Edited 1:30pm
Understanding the Cyclic Mode and the Trending Mode (John Ehlers)

The effect of the Underlying Trend - Up, Down or Flat : Neutral

Trending Mode

Underlying Trend is BULLISH
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  • #7,334
  • Edited 1:47pm Feb 20, 2022 12:59pm | Edited 1:47pm
Understanding the Cyclic Mode and the Trending Mode (John Ehlers)

The effect of the Underlying Trend - Up, Down or Flat : Neutral

Trending Mode

Underlying Trend is BEARISH
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  • #7,335
  • Feb 20, 2022 4:29pm Feb 20, 2022 4:29pm
For Swede

GBPUSD Weekly
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  • #7,336
  • Feb 20, 2022 4:46pm Feb 20, 2022 4:46pm
CBPUSD Weekly

Long Term Analysis and Prospective

using a series ; 13, 39, 78, 156, 312 Weeks
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  • #7,337
  • Feb 20, 2022 5:12pm Feb 20, 2022 5:12pm
Time will tell
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  • #7,338
  • Feb 20, 2022 5:50pm Feb 20, 2022 5:50pm
Quoting Swede
{quote} Funny, they say great minds think alike. (forget the part about fools seldom differ lol lol)...I was on a very nice hike through the coulees this afternoon, thinking about the weeks since using the 5CMA charts, and I decided to explore using envelopes, just one envelope on the chart to alert me to out of bounds areas....I think it would be a good alert and then I log in to find you have already done it....anyway, not sure of a good offset but going to do some work on it....
Hi Swede,
I know what you mean about the great minds, but my mind seems to be drifting far away from great lately, but I'm thankful to be here another day. I like to go on long hikes or walks to clean my mind. In times past after leaving them SOES method of trading I became a position trader of sorts but have for the most part now become a short-term trader. The get in, get it & get out type of trader. Although there are times, I let them run for as long they are gaining.

The Cycles are the constants in the market. No indicators needed beyond those needed for cycle analysis.

Thank you for your response & your willingness to share on this great forum.
  • #7,339
  • Feb 20, 2022 6:04pm Feb 20, 2022 6:04pm
Quoting parisboy
{quote} Good question Ace. The level of stupidity repeated by 99,99 % of traders about Moving Averages always amazed me since I discovered Hurst in 2006. I wrote " Moving Averages" because no one, outside me and some readers of this thread, use Centered Moving Averages. The first common stupidity is : "it lags". In itself it is not a stupidity to say and write " Moving Averages lags." , even if almost nobody is able to explain precisely why Moving Averages "lag" . Note the "lag" of a Moving Average is equal to 1/2 of its span.The "lag" of a 10 Days...
Parisboy,
I must say until I discovered your great thread, I too saw very little good in using CMA's or cycles. My mind has been changed. You have lifted the curtain shrouding the secrets of Cycles & CMA's. Cycles are constant in the market. We must learn how to read them. Thank you Parisboy for exposing the CMAs to the masses of traders willing to learn. You have truly turned on the to those of us in the dark. Thank you, MY FRIEND. May the green pips come to you.
________________________________________________
  • #7,340
  • Feb 20, 2022 7:52pm Feb 20, 2022 7:52pm
The amount of useful and eye-opening information parisboy has taught us through this thread is unbelievable. And with so manyy examples. It's almost impossible to not learn! It's taught me the right way to see market data and analyze it. Eliminating the noise and interpreting the data in a useful and successful way. I have been trading the methods taught here for a couple weeks, and although there's much for me to learn, I've been getting tremendous results.

Great, informative set of posts as always parisboy.

Thank you!
When there's a will, there's a way.
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