What Does It Mean?

Gloomy Windows, Steamy Sunday, what do you mean what does it mean?

We already talked about Cover in OverSold, +90 pips minimum on the upside (max. 210) followed by a lower low with a reversal divergence. The prompt was the 18-sample daily stochastic dipping below 4.5, making it much too oversold for a turn. Now we have put in a weak divergence up yesterday, had a run up to the 9-day EMA and then further softening the divergence – if not on a 2-sample RSI, then on an analogue stochastic reading. These reversal divergences set up the end of an impulse wave. An impulse wave ends on weakness vs a corrective wave that ends in strength.

What does an extension fill mean? When a move is violent enough measured in distance / time, the inertia would likely carry the price to a distance that is proportionate to the trigger move. No Fibonacci anywhere, only a 1.5x multiplier. Once this distance is reached, a turn away is likely to occur due to the dumping into the high likelihood limit. You certainly have a great edge thanks to my presents handed out in the Consistent series.

The brown lines are RSI2 continuation divergences. The Overdrive bands we have discussed already. 2Far means price has gotten too close to the Overdrive. Effect means, price has pierced it. The Q: is the 3-day average ATR. 100.3 pips currently.

You should consider plotting the 9-day EMA on the 4 hour chart in the usual red color (52 sample here) as well as the 20-SMA in the usual blue (120 over here).

What does the gap down mean in a bear market that is not coming off of strength? It means institutions had to sell some futures in the pre-market to hedge off their downside risk (same thing as a gamma squeeze is in the options market), this was an exhaustion gap down and time spent down here would be limited. There’s a new bag holder in town. I know I said this is the end of a move, but all in all this does not mean you are looking at the last leg. An up move should take back to above the E-44 daily first. Again.

What does it mean when there is no-counter directional volatility measurement (recoil) during the wave down (see the leg with the gap down to the purple line (3x fluctuation maximum from the mean / 9-day EMA)) and the leg up back to the mean (Green River = 9-day EMA high to low)? It means that the market is currently printing impulsive moves which end in hourly RSI2 divergences. These two legs together represent a V-bottom.

What does it mean when price first goes outside the Range by 80 degrees and starts printing Magenta?

It means that you have an edge for a fade. If there was a second Magenta block, then you would see an undercut of the low in a No Break Extension manner which means less than a Fluctuation Maximum, namely around 30 pips more before the turn. If price started printing Magenta for a 3rd time, the reversal would be voided.

What does the two reversals mean just beyond the purple lines with the two added purple arrows? They mean that the market is turning after a statistically likely tuning distance of 105 pips from the last swing low/ swing high.

What is Magenta? It is a non-existing color, a trick of your own mind.

What does all this mean? That you may be looking at some of the best edges anywhere that can be utilized for trading the Euro against the Dollar, in particular with the 15-Min ATR Targets Pro Continuous routine.

Another way of spotting a reversal divergence is this: the relative distance to the 9-day EMA decreased with the new low print.