Roy:
The basis of the 89 is: If price is above the 89 = bullish, price below = bearish. When you say 'direction' do you mean the slope or the angle? There are times when the price can be above the 89 but below the 21. This is still a bullish area but it also may signal weakness. Take a look at the EU the last few weeks and see how the close was rarely below the 8, that was strong rhythm, very bullish. We then had a close below the 21, a few times, still bullish but things are getting weak. The direction of the 89 was still up (angled up) but things may have been slowing down with the close below the 21.
One thing to note: I think we are in a situation where the fundamentals have control of things right now. The US economy along with the commodity markets are pretty much in control right now. So, this can take precedence over any method that is traded right now.
Back to the rhythm, there are those times when the price is above the 89 and above the 8 but all the three lower moving averages can be withing 20, 30, 40 pips of each other. This is market congestion or a ranging area. By definition the rhythm strength is +2 but it's best to let the market break out of this area and then wait for another 'cleaner' entry.
Thanks Palmer,
One more question. Consider the following scenario. Price is above the 89 therefore it is bullish and +1. But price is below the 8ema which makes it a -1. So is the resulting rhythm strength = 0. Bullish rhythm strength of 0??
I apologize if this question may seem trivial and annoying. I'm trying to figure out where I may have missed something in the material.
Thanks again for your response.
roy
Roy:
If price is above the 89 we're at +1 and if price is above the 8 (and the 8 is above the 21) that's another +1. So, +1 (+) +1 = +2. Opposite for price being below the 89.
When the rhythn strength is zero, by definition, the close is at the 89. This does not happen too often. The price can in the vicinity of the 89 by a few pips, like the EU is now, but we just got there more or less. We are in the vicinity of the 89 and we are below the 8 and this would give us a -2. But, you kind of have to take in the whole picture of the trend. We were bullish for a long time and only in the last few days did things change. The Rhythm Strength is a general rule to use when the market is trending well. We were +2 for a very lonnnnng time and only in the past few days we went to +1 then -2. That's a very quick turnaround for the market motion. Take a look at the example charts here: http://www.fxtradeblog.com/rhythm.html
and see if this helps.
Again, the formula for the value here is just a general rule to what the market is doing.
There are no trivial or annoying questions when it comes down to trying to make money
Can anyone help me out with drawing fibs? I am having problem with my TLs and missing out pips on good trades. I couldnt find any post of fibs.
mike_dg, please work on PMA(Possitive Mental Attitude)!
Regards
