Daily / Intraday Bias Trading

Daily / Intraday Bias Trading

This trading method / style came from observations made whilst trading the DHR Line Method.

I have always had an interest in understanding how the price range expands during a single day. We know that that price movement is cyclic in nature. What if a daily picture was taken at the end of the day, of the daily expansion, a computer could probably categories the pictures and determine the daily bias at the start of the day.

This is just a concept but has led to the beginnings of a trading method / style which I use and could benefit from others input.

The idea is to identify day / intraday bias / cycle, to help trade the trend or counter trend etc…

For intraday trading, in my opinion (others may disagree), the daily open price is the point of control. It is the single price from which the range of the day expands from in an asymmetrical way. Price often, but not always, zigzags above and below the open price through the day.

The second line utilised is the previous day mid-point (pdm) to form an D1 open to pdm (opdm) box. Observation has shown the pdm to be an important price. Put the indicator D1 Open Mid on a M15 chart and observe. See how in ~80% of the day the price moves from open and touches the pdm. See how there are also days when price is not even in the opdm box. This gives the potential to categories / provide a story to the potential direction of price travel.

Previous day high and low are not shown on the chart as they are only used to determine if a narrow open has occurred; which can be easily seen. This is one of the categories of trade.

Chart:
- M15 works best

The indicators used are:
- D1 Open Mid Lines
- 50 EMA, Closed price
- PSAR H1 0.05, 0.1

Trade based on interaction of price with 50 ema at open line or mid line as in diagram.
There are at least 6 types of trades and some catagories of trade trump other seups.

Each type of trade is potentially a trading method on it's own but are to be combined so that each day the bias is potentially known. I could be dreaming thought...

The chart explains the concept better. If there is interest it can be explained further / developed or traded as is.




Indicators:

At present on EURUSD M15 looks like a narrow open category of trade.



If confirmed by maintaining narrow open it may move ~20 pips upwards. There is 12 years of stats to support this statement.

Look how these two days look similar:


Lets see what happens..... or not.

Note: Nothing works 100% of the time with forex.

Narrow open not confirmed

Hi Ronin,
your system is very original and interesting. It should arouse more interest here on FF. If it works, it's a method of being on the right side of the market on any given day. Can you explain your system further and also post some screenshot? Thanks.

The first category to look at is the narrow open range.

A narrow open range is defined as the high of the day to the open or the low of the day to the open being with a maximum range of pips. The smaller the better.

The observation is: if the open range is narrow the bias for the day is set. However the open range must stay narrow and this is the tricky part.
We can try to use maths to solve this part or other indicators.

If we look at the historically date over the last 11-12 years for a buy bias on eurusd for example we find for a 5 pip narrow open range (open-low) the following:

5 pip narrow open range

------------Open-Low (pips)---- High-Open (pips)
StDev _______0.00017 _______0.00363
Mean ______ 0.00023________ 0.00780
CV ________ 0.70846_________0.46593

Which means for a narrow open range (open-low) of 5 pips maximum the price moves up by at least ~36 pips, so if the price moves up by X amount the probability is that the narrow open range will remain intact. This is the basic idea. Thoughts welcomed.

Ronin,
I hope you do not mind me modifying your concept a little bit and I hope you can see my results.
I removed the 50 EMA and PSAR MTF and replaced with a better setting PSAR that does not need any EMA.
I await your comments.
cpfleger

This is what the narrow open range result looks like on EURUSD 1H Chart:




Remember we are looking at the daily time frame. Red dots a Bear Day, Blue Dots a Bull Day.
Obviously we are looking at the past where everything looks great. As mentioned it all depends on if the open narrow range remains intact

Ideas and modifications on the theme of the method are always welcomed. After all we want a good conversation, exchange concepts / ideas and build a better method(s).

Please could the psar setting etc.. be shared? Thank you.

Ronin,
As requested.
cpfleger

I love trading, do YOU.
cpfleger

USDCAD Narrow open range day, bear bias. Has moved the min of ~36 pips so move could be over. However that assumption is based on EURUSD NOT USDCAD Data. The stats must be calculated for each currency pair.

Lets continue with the first category of the narrow open range with an open narrow range dashboard.

Due to the ongoing lack of conversation / constructive feed back, it seems I'm mostly writing to myself, all indicators now have an expiry date of one week.

There is a lot of downloading but hardly any conversation.

I find this system interesting, looking to bring it to TradingView. Will respond back once I can do so thanks for your time!

My charts start new day at 5:00 PM EST is this okay?

Let me take a stab..Is this considered buillish? narrow open, price opens with H1 sar bearish and price above ema. However looking at box we have buillish bias?

Price drops below 50 ema, and H1 sar switches bullish and then price cross back above 50 ema and starts to run up, would this be a bullish confirmation?

these setups looks scary, narrow range infinitely more accurate right?

Is this bullish on CADJPY

Thank you for joining in Firescape. The method is experimental but has already shown some nuggets of gold that potentially can be traded as a method on there own and/or part of the system being investigated.

I think the day should start at 00:00 Coordinated Universal Time (UTC). But see what start time is possible and works.

Agree. Open range is one category. Interact of 50 ema with daily open line is another.