It is quite simple in concept. Some people apply a measurement to legs of price movement, regardless of time. I apply it to fixed intervals such as 1 day, week, month etc.
The "theory" is that a bounce of unknown extent is likely here. Why? I don't know, but it does work and does so very well, especially coupled with peak and valley analysis. I see it as a likely place for price to take off form should it get hit. If the day opens at around this level and trades around it for a few hours then it is pretty much useless. If price opens somewhere else and then arrives there with intent, a reaction is far more likely. Alas today USD/JPY with the 50% of the previous GMT day:
the thing i'm looking for is if there is a logical explanation (don;t dare to say scientific), in addition to the empirical one.
like we all know the sky is blue, but some smart scientists found a reason why.
It is quite simple in concept. Some people apply a measurement to legs of price movement, regardless of time. I apply it to fixed intervals such as 1 day, week, month etc.
The "theory" is that a bounce of unknown extent is likely here. Why? I don't know, but it does work and does so very well, especially coupled with peak and valley analysis. I see it as a likely place for price to take off form should it get hit. If the day opens at around this level and trades around it for a few hours then it is pretty much useless. If price opens somewhere else and then arrives there with intent, a reaction is far more likely. Alas today USD/JPY with the 50% of the previous GMT day:
the thing i'm looking for is if there is a logical explanation (don;t dare to say scientific), in addition to the empirical one.
like we all know the sky is blue, but some smart scientists found a reason why.
Ignored
I think the most logical explanation is that based on past performance (or data, or whatever you called it) it's work.
If you look for reason like about the sky you mention...guess it's impossible, since the reason why the sky is blue is absolute (meaning that if that's happen the result would always be the same). But in forex, the same setup might work only 20% of the time. Or maybe 50%, or 80%, or any other percentage.
Based on past performance, 50% retraction rule works over 50% of the time. That's all.
