Here I post the final example of this cycle. This thread is about Optimized Trend Trading and not only about fancy indicators.
Here you may see the three objectives. They are reached with a lot of precision (always amazes me) and they coincides with technical support and resistance levels that makes them important (remember there is a correlation between the technical support and resistance and the levels where the orders are)
Maybe this would be the final posts concerning the fibo sequence with the cycles of the fractal characteristics.
You see clearly that the market really moves when it is in its persistent state and consolidates when it is in antipersitent state.
I can make an analogy with the transfer of electrons from one energy level to another it is made by jumps. So it is the fractal break - out when it is combined with volatility produces that.
However there may be two distinct but mixed phenomena. One is the the increased volatility and the other is the butterfly effect of the hit stops.
However the markets nowadays when we go to daily - trade graphics move by persistent movement jumps that can be so fast that sometimes we may not profit by them because of slippage, re-quotes (it depends on the service provider). The good old and slow trends are in the past and are an exception in the XXI century (most of the instruments and techniques were developed for completely different markets that do not exist today).
This is a model bringing some light into extremely complex world.
OK what the market tells us now. The market tells us that all the objectives for the upward movement have been accomplished.
After their reach the market started to consolidate between those two levels (today the market is not truly typical but this is for educational purposes).
That means that we need a new fractal break - out in order that the market moves away from those levels. And we cannot predict in which direction it will take place. There are limits in the predictability. (Well it is not exactly because there are bigger attractors and trend influence but even if we are in the perfect trend there are so many sucker false break )
Meanwhile traders see that and start to make little positions up and down into a ranging trade mode. In the same time there is an accumulation of stops and orders from the both part of the trading channel.
This is the Forex Casino: Red or Black you may like it to play if you like Casino games.
The mechanism is exactly the same. The Croupier is waiting for the players to put their bets. After that le jeu est fini. And there is a break - out. As in the casino the money of the loosers goes to the winners (the stops of the wrong traders fuels the movement of the winners).
No matter which instruments you use in that moment you cannot predict anything the chances are 50 / 50 with iVAR estimation of Hurst exponent 0.5 (Brownian motion)
When we can expect the break - out? During normal market condition we would expect that now the volatility is decreasing after at lunchtime and the chances for break - out are decreasing. We can expect that the volatility will increase at the open of the US session. However I have observed many times break - outs in the European afternoon before the US open and this is a statistical guidance.
Here you may see the three objectives. They are reached with a lot of precision (always amazes me) and they coincides with technical support and resistance levels that makes them important (remember there is a correlation between the technical support and resistance and the levels where the orders are)
Maybe this would be the final posts concerning the fibo sequence with the cycles of the fractal characteristics.
You see clearly that the market really moves when it is in its persistent state and consolidates when it is in antipersitent state.
I can make an analogy with the transfer of electrons from one energy level to another it is made by jumps. So it is the fractal break - out when it is combined with volatility produces that.
However there may be two distinct but mixed phenomena. One is the the increased volatility and the other is the butterfly effect of the hit stops.
However the markets nowadays when we go to daily - trade graphics move by persistent movement jumps that can be so fast that sometimes we may not profit by them because of slippage, re-quotes (it depends on the service provider). The good old and slow trends are in the past and are an exception in the XXI century (most of the instruments and techniques were developed for completely different markets that do not exist today).
This is a model bringing some light into extremely complex world.
OK what the market tells us now. The market tells us that all the objectives for the upward movement have been accomplished.
After their reach the market started to consolidate between those two levels (today the market is not truly typical but this is for educational purposes).
That means that we need a new fractal break - out in order that the market moves away from those levels. And we cannot predict in which direction it will take place. There are limits in the predictability. (Well it is not exactly because there are bigger attractors and trend influence but even if we are in the perfect trend there are so many sucker false break )
Meanwhile traders see that and start to make little positions up and down into a ranging trade mode. In the same time there is an accumulation of stops and orders from the both part of the trading channel.
This is the Forex Casino: Red or Black you may like it to play if you like Casino games.
The mechanism is exactly the same. The Croupier is waiting for the players to put their bets. After that le jeu est fini. And there is a break - out. As in the casino the money of the loosers goes to the winners (the stops of the wrong traders fuels the movement of the winners).
No matter which instruments you use in that moment you cannot predict anything the chances are 50 / 50 with iVAR estimation of Hurst exponent 0.5 (Brownian motion)
When we can expect the break - out? During normal market condition we would expect that now the volatility is decreasing after at lunchtime and the chances for break - out are decreasing. We can expect that the volatility will increase at the open of the US session. However I have observed many times break - outs in the European afternoon before the US open and this is a statistical guidance.