Experimental Circle Analysis of EUR/USD

I'm working on a new kind of analysis for the Euro/USD based on zones of buy and sell pressure on the 4hr and Daily TF. I've been posting a little of it over on the Eur/USD thread but I don't want to keep bothering them over there with this, especially since a lot of new traders are there and I don't want to influence their trades with an experimental system.

I welcome others to join in and help figure out how this system can be improved. I've created the basic structure already, and I'm now following price movement in real time to see how true it proves, demo trading it.

This started with basic observations of the 4hr Eur/USD chart. I noticed how it was trending in circular patterns. So I started filling in the spaces with circles. I then started examining the Daily charts and did the same thing. Then I combined the Daily Zones of Sell Pressure and Buy Force with the 4hr zones, into one comprehensive chart.

The rules of the system are simple. Price moves around the various zones and does not like to penetrate them. The smaller 4hr zones are respected more than the larger Daily Zones. The 4hr Zones create pathways for the price to move through. When there is a choice of two 4hr pathways, Price chooses the one which least violates the larger Daily system.

The Chart I'm including shows predictions based on this activity into October 2009. The farther you try to map these circular zones into the future however, the less reliable the results should be, or so I assume.

Again, this is experimental. I only demo trade this for fun, and to learn what I can about how these zones affect Price movement, and what can be learned about their predictive rules. As time goes on and price continues to reveal itself, it should provide a good foundation for a lot of interesting analysis of the system.


PLEASE SEE MOST RECENT CHARTS HERE-GREATLY REFINED AND CORRECTED

http://www.forexfactory.com/showpost...3&postcount=40

I'm also going to try to give my analysis of the current situation with Eur/Usd as it relates to my system.

After we sold off from 4300 it presented an interesting situation. The Euro sold off hard and the 4hr was badly oversold. At the same time you have these two major systems of sell pressure, both Daily and 4hr, looming overhead and to the right. Also, the only channel for real significant movement left, according to the system, was a bear channel.
According to the system, a bear movement to about 3900 is 100% at this point.

So correction struggled. Bulls finally got to 4145 and failed. 4145-4160 represents the perimeter of these two zones of sell pressure. Price went up again to 4152, and failed again.

PA is currently at 4115. As time goes on the Perimeter of these two zones will get lower, and we should see price crumble their weight.

Keep in mind the system allows for violations of these zones to some extent. Price violates them regularly, but just not deeply. However, what we need to see in the near future to validate the system is plenty of selling.

Here's an updated chart with current price movement and some additions. We're seeing a lot of bullish movement but we're not in violation yet.

One more correction (on the deviation area).

Well the Euro continues to shock us all. Nice vertical leap today.

However, this has not invalidated the system's nearest prediction.

Not yet, anyway.

There are two charts here. One is a local chart of the expanding triangle that we are now in. If you examine the triangle, you will see that it is actually a very bearish pattern. The lower lows that it is establishing deviate far more from the median line of 4250 than the higher highs. The next logical high on the triangle is 4330, or possibly 4338. Once we touch a high or low we've been getting whipsawed to the opposite end of the triangle. If this pattern continues it would lead to a massive downswing once the high was touched. Logical down target, 3865, which is pretty close to my nearest prediction of 3900.

So the expanding triangle pattern and my system's target coincide. You will see what the scenario would look like on the triangle chart, and I've also updated my circle system chart to show how it would look on there.
If this is what we are in for early next week, should be pretty radical.

OK down to hell

Lol, thanks for posting, your da first!

This is just a simple close up study of one of these four hour systems, zoomed in on with the 1 hr chart. You don't need to know any of this stuff in order for my system to be profitable(assuming it proves itself to be reliable), but it gives you an appreciation of just how weird and complex the activity is which is occuring around these zones.

In themselves these zones are neutral-if price comes at them from above they act as buying support, if price comes at them from below, they act as selling pressure. They're just psychological centers generated through the history of buying and selling the Eur/USD.

Woops, got moved, sorry admin-color me a newbie

I've updated the 4hr system study with some important new features. If anybody has any questions about this stuff don't be afraid to ask. Thanks.

I think the main reason people are not responding is because this just looks complicated. Plus its the weekend, can't expect too much brainpower. Or maybe its just me...lol

Can you post some charts showing how the circles are drawn. Maybe a couple of circles instead of like 20.

Thanks

Well I just started by using the snipping tool to take a picture of the 4hr chart. I imported into Microsoft Expression Web, and expanded them a little. Then if you stare at them a little and look for the circles in the range its pretty easy to fill them in. They just sort of pop out at you if your looking for them.

So once you have the range filled in, you can infer what the future ones would look like by filling them in at the intersection points of the ones you've already drawn. You can do that so far, and after a while you start to wonder, which is why I think that this may be good for predictions only a couple of weeks in advance.

Once enough new price data comes in I'll redraw the chart, to keep the nearest predictions as accurate as possible.

BTW-the four hour study isn't neccessary to understand-that may be useful if you want to trade for very short periods of time-the standard deviation is really useful for that. If the price penetrates the red circle deeply for ex., and you decide to buy, if it keeps slipping past one SD you know to Stop Loss and wait til it hits 2 SD's. Aside from that its not that important- just the bigger chart is.

Ok here's a simpler version of the 4hr study, and it shows you how you can use the Standard Deviation Unit to make buys when the red circle gets penetrated. This is apart and aside from the larger system I created, but this would work too, especially good for those of you who like to trade short term.

your observations are correct, in fact on my thread ive shown this applys to all major currencys using circle trading,profit loss profit

on http://www.forexfactory.com/t/156769...oncepts-1.html

also this method has been used succesfuly by others and ive documented this
circle method with actual trades

also its been developed and used by 101 in his method

finally i have received from another trader hows live account opening balance in december 2009 has gone from 100k to 754 k ,

in demo trade using an investor code pw he took his demo account from 25k to 40k in one week, i can prove that the circle method of trading works as per your observation, i watched his version using 5 min delay in his demo mode, which is mirrowed in his live trades buys and sells 5 min delay

so i have displayed screen snapshots of this method , i trade it live on 3 brokers , it is an established fact

the circle following the trend goes from profit to loss to profit, using entrys hh ll its that simple

there are many varieties of this central theme 101s dojis, and mine

bringing in both dojis and mine 100% hit rates

your observations are corect and your documentation is great

dojis been using the eurusd and the gbpusd live for 8 mnths

ive been doing it testing now for 15 mnths also showing 100% hit rate both live and demo

SO YOUR OBSERVATIONS, ARE NOT JUST THEORY THEY ARE PROVEN BOTH IN LIVE AND DEMO

GREAT WORK GOD BLESS YOU

FROM Brian

this idea has been discussed also on
http://kreslik.com/forums/viewtopic....ghlight=3clipz

this was the basis for 101s very well known thread, he used in developement of his strategy i think , 101 gave credit fot this in his blog

Hey thanks a lot for the good feedback, I really appreciate it! I felt like I was all alone in this method-less lonely now

Glad to hear about your success and the success of your friends, I'll check out that post. I'm interested in learning about different styles of this method.

Peace, thanks, and God Bless-

Here's another version of the 4hr study showing how to make sells using the Standard Deviation unit.

i demonstrated on an early thread re roll over how the 8 major currencys move over a 1 mnth period from profit to loss to profit, the movement can be large as shown on this screen snapshot

so you may down load brians indicater here and draw your circles as per an example on mt4

the indicator plots the 8 major currencys in colors for each currency, you can clearly look at history of month major moves and see the corelation of currencys
ill post a screen snapshot showing dojis 40 k balance obtained over 7 days
no stop loss just working on circle trade with position averaging with the brians index and circle as an example for you to draw your own

ggod bless you from BRIAN

Interesting predictions, so guess you draw two major circles (buying zone and selling zone) fitting highs and lows, from break out point. Break out point price is the centre of selling zone and low pivot before break out is the most likely centre of buying zone, is this correct? Would you care to share curve fitting rules?

Nice thread Steve,
I´ll be following your posts. It´s a very interesting theory(system).

Thank you for Sharing.

does it applies to all TF`S?