I said on these columns before, that the largest moves come from losing the overbought/oversold condition. Here is a most recent example.
Could anyone have known where the bottom would be before hand? I certainly did, thanks to my comfort levels. (Imagine how easy it could be to pick strikes for options!) Did anyone know where the bounce would come up to? Sure, 50% is was a great bet, but in reality, it was the Lema’s cloud.
That candle with the wick back testing the cloud, is a Kiss Good Bye, or a KGB.
KGB examples. The first circle was a french kiss. You can also see the gap down touching down at the bottom of the upper reversal zone (shaded). Gaps are signs of being in a wave 3.
Now, if you want to manage funds, you need to start using fund manager tools and apply fund manager thinking.
The sample size for the comfort levels – on TOS was set to 14 * 5.5 * 24 for Forex pairs and 14 * 5 * 23 – 20 for other. These numbers were as close as you can get to the maximum feed provided by the broker. The above images were 1H samples.
On MT4 the sample size had to be different, you get less data here. And this number is different per time frame. On a 4h you can have 1590 sample, on daily, 1025 is scratching it.
I’m not going to go into embedding, saving again. Instead I can elaborate a little on the tracking/mapping part.
On the above example you can see circled when the price, after a long rally finally violated the 80% line giving you a pullback exceeding 20%. This Sing Of Weakness defined the point when the market stopped mapping and started tracking. In other words, it settled the working range.
So, now you have one tool, a large sample high and low, the 10% lines in between and the proper, fund managing thinking that is based on percentages.
These, 10% lines (and the 5% ones at times) are the dividers between you having to act or not act.
There is also the understanding the consolidations based on their location and length that would help you out. Consolidations are for alleviating an exhaustion condition, with enough time given, the level of consolidation gets worked up to high enough for continuing with a move (by setting a new weight point at the current location).
To recharge the 1h energy you need at least 4 hours, which is 8 candles on the 30 minute.
Now, if you are in Forex, you should be paying most attention to the 4h charts and the little brother, the 30m.
Now, what about the 5%’s? You need to keep an open mind and look up. Meaning, there may be an obstacle appearing on a higher time frame. Your evaluation points accordingly would be at the 5% strikes.
I.e. this wrapping around the 60% line is probably due to the 4h hitting the bottom of the upper reversal zone (from 95% to 85%, shaded).
As for why the 30 minute basis, your 3rd tool, the 3-daily ATR can answer that. 81 pips currently would allow for a 10% move carried out on a single day, the rungs on this frame are currently 71 pips apart.
Bonus image 1: Current Location of 1h LEMA+Cloud
Bonus image 2: Location of 30m LEMA+Cloud (check where the 30 min consolidation was taking place…)