With you on this.
...and currently, and nice compression forming on the 5 and 15min charts for Cable - I use Guppy profile in its original format - with but some 10 minutes to London open. A regular occurrence.
With the narrower range of Guppy MAs (GMMAs) I could see how
you might find several compression pattern trade set-ups on the
5m and beginning to form on the 15m. In my charts with a wider
array of EMAs I marked the same general area as a NO TRADE ZONE
which I found too choppy, to allow the pattern to tightly form.
For those interested in the set-ups:
Using the Guppy profile: (3, 5, 8, 10, 12, 15 ema's) for short term
traders, and for long term investors (30, 35, 40, 45, 50 ,60 ema's)
you'll have more compression pattern set-ups and somewhat earlier
entries but also be subject to more fake-outs and moves of shorter
duration. Both groups are placed on the charts for comparison.
I use a wider array of ema's (6, 18, 35, 54, 72, 90, 108, 126, 144)
which produces fewer set-up with tight compression pattern (relative
to the tfs) but also greater energy build up for bigger moves. I also
add a dotted 200 for a S/R and target reference only.
On these two charts (5m and 15m) labeled NO TRADE ZONE, my EMAs
which extend out to 144 ema never tightly compressed on the 5m
and never even came close on the 15m. There were 'crossing patterns'
with the choppy volatility but all in all were still scattered and never
compressed adequately for a confident set-up.
I think Guppy focused more on grading the strength and longevity
of the move after the breakouts by observing the relationship between
the two small groupings of EMAs and how they interacted. If the
smaller group should separate from the larger groups which is going
to happen on sharper (higher angle) breakouts then he would judge
that as a safer entry and stay with the trade longer until the groups
converged forming the 'bubble' pattern. I also believe he was working
with ONLY higher tf charts such as the daily in the stock market rather
than the forex with it's high volatility seen on smaller tfs.
Just my observations.
Dr. D.
