Market Sports – Concentrate!

What to concentrate on?

The Fractals

We have fractals thanks to Bill Williams.

They should limit the very things you need to concentrate on, yet they have awful limitations.

One limitation is the sample size: the iFractals routine would “advance” the Fractal to the last bar to the left of the current one yet the current read isn’t settled yet not to mention the one that is to be printed in the future. You can only can call something a fractal if it has two, bars to its right settled. In other words there is uncertainty to any fractal print that is less than 3 bars away from the last one. All calculations that disregard this fact may end up with false conclusions, bad triggers.

The other, even more problematic thing is the speed incompatibility. The market has different speeds, and sometimes it would move way faster then your chosen metric, your time frame.

Take a look at the sell-off below. There is a down leg, that ends in that orange X.

It shows only 1 fractal (diamond). Were there no other fractals then? Yes, of course there were.  You may have to go back down several time frames to make them appear. (You can see that the X fractal was actually a bottom tested twice.)

Why is this a problem? Because it throws off your fractal count. And you have no tangible measuring points for finding terminal length waves, especially if speed the market commutes at does not leave even a blip on the RSI2.

(Teminal length Waves in black)

Yet we want the fractals. But they are too many still. What if you started marking the ones that are both oversold/overbought on RSI2 and 9-sample Stochastic D as “Sync” lows and sync highs?

stoch[i]=iStochastic(NULL,0,9,3,3,MODE_SMA,1,MODE_SIGNAL,i);
RSI2[i]=iRSI(NULL,0,2,PRICE_MEDIAN,i);

if(stoch[i+1]<23 && RSI2[i+1]<16 && RSI2[i+3]>5 && !(stoch[i]<5 && RSI2[i]<5)&& iFractals(Symbol(),0,MODE_LOWER,i+1)) sdn[i+1]=Low[i+1]; if(stoch[i+1]<38 && RSI2[i+1]<16 && !(stoch[i]<5 && RSI2[i]<5)&& iFractals(Symbol(),0,MODE_LOWER,i+1)) sdn[i+1]=Low[i+1]; if(stoch[i+1]<44 && stoch[i+1]>5 && RSI2[i+1]>5 && !(stoch[i]>15 && RSI2[i]>15) && iFractals(Symbol(),0,MODE_LOWER,i+1))
sdn[i+1]=Low[i+1];
if(stoch[i+1]<5 && RSI2[i+1]<5 && !(stoch[i]>15 && RSI2[i]>15) && iFractals(Symbol(),0,MODE_LOWER,i+1))
sdn[i+1]=Low[i+1];

if( ((stoch[i+1]>64 && stoch[i]<85 && RSI2[i+2]>85 ) || (stoch[i+1]>72 && stoch[i+1]<75 ) || (stoch[i]>44 && stoch[i+1]<35 && stoch[i-1]<44 && RSI2[i+1]>85 )) && RSI2[i+1]>70 && !(stoch[i-1]>95 && RSI2[i-1]>95) && ( iFractals(Symbol(),0,MODE_UPPER,i+1) ) && !sup[i+2] )
sup[i+1]=High[i+1];
if(stoch[i+1]>64 && stoch[i+2]<64 && RSI2[i+1]>85 && !(stoch[i]>70 && RSI2[i]>95) && ( iFractals(Symbol(),0,MODE_UPPER,i+2) ) && !sup[i+2] )
sup[i+1]=High[i+1];
if(stoch[i+1]>85 && RSI2[i+1]>85 && !(stoch[i]>85 && RSI2[i]>95) && iFractals(Symbol(),0,MODE_UPPER,i+1) && !sup[i+2] )
sup[i+1]=High[i+1];

I have a sorting routine that names them further as S, S1 or S2 and X. No two brokers data would be the same, but you are only going to start to find out how different they really are, when you start plotting with multiple ones at the same time. One broker may call a bar a doji, for they never adjusted the bid during the period while the other made a transaction and has a bar that has a body. Imagine if you are looking for 3 green candles as a sequence. One broker would find it, the other (with the doji) would not, for a doji’s close may not be higher than its open.

Since the bid data isn’t the same, the RSI, derived values would not be the same either. One thing I had to personally do to synchronize the end result between two brokers when plotting the Forest, was to use different cross back values: one broker’s RSI 77.8 is the other broker’s 77.7 – that one tenth can make all the difference at times.

Since this article is getting lengthy, I’m only going to discuss the surprise turn that happened today, and two ways that you could had spotted it.

Concentrate on the cyan shading please. It is the time out resistance that was made within 8 hours of the first thrust up. The high of the box was taken out – which should not have happened, and price then trickled down to the E-16. 

The main lesson for you in this, “what to concentrate on” section is the idea of relativity and the significance of the seemingly insignificant.

On the image below, please tell me what is the most important occurrence, the most precise telltale of the dynamics?

I’ll help a little.

What happened under the first yellow-out?  The market lost the overbought status.

What happened under the second? The market back tested the oversold level.

The sliver lines on the gray background – ironically are the best visuals to tell you about the consolidation. The qualifying run, the first “Sync” fractal adjusted the overbought level lower. All the consolidation was taking place around the overbought line and the oversold line was never touched again.

The gray plots as well as the time out boxes are part of my 88 Luftballons routine.

The calculation for the gray lines:

if (sdn[i+1]!=0) {minus9[i]=Low[i+1]-110*Point; minus[i]=minus9[i]+FSize/2*10*Point; minus15[i]=Low[i+1]-180*Point; minus22[i]=Low[i+1]-240*Point;}
if (sup[i+1]!=0) {plus9[i]=High[i+1]+100*Point; plus[i]=plus9[i]-FSize/2*10*Point; plus15[i]=High[i+1]+170*Point; plus22[i]=High[i+1]+220*Point;}

where FSize is 32 as per EUR/USD, and the gray lines are the plus and the minus


Wishing On A Star (_RSI2_)

Your trade plan, as follows:

  1. Obtain a copy of my _RSI2_ indicator.

2. Open positions based on the indicated color – red or green

2a. Play one direction only, the color changing stochastic line is your main guide

2b. Fine tune your entry with the RSI2 values (black line).

  • On a green background, open buy when the RSI2 is below 23.
  • On a red background, open sell when the RSI2 is above 77.

3. Wish upon a star.

3a. Your Exit signal is a star followed by no star.

3b. Or the stochastic line changing to gray.

As you can see from the image above you had your exit signal before the gap up over the weekend. And the plain above was called a sell all along.

You may further ease your life by obtaining a copy of my _88_Luftballons indicator, which would plot the current RSI2 readings with large billiard ball numbers that are visible from the other side of the room. It also has about a zillion features that can extra fine-tune those entries and exits.

The latest new feature is the “time is up” powder blue boxes.


Driven Thrusts and Lackluster Busts

Knee deep in Hybrid trading I need to define the human role in a binary way.

I have been thinking about what the Human indicators would look like.

My current conclusion of the supplementary human trading is that it should be an “investment” in the right direction.

To figure the turning as a progress is more crucial than ever.

The market can turn both on a high/low note and on no participation – hence the title, and the first examples are here to look at.

Lackluster Busts

On the image above there is a pink projection box, where the thrust should had landed in the next 10 samples or 5 hours. There was a thrust later that made it to the further level, but with significant delay. All the circled swing strength measurements fell in the moderate, 1x readings. The market ended up bowing back down.

Driven Thrusts

I have got 2x 2 examples for you. I call the market “Driven” upon printing 3 consecutive embedded RSI2 max / min readings. 

Once the condition subsides, the thrust becomes due. There may be multiple ones of course, but they should arrive in the next 5 hours if the interest is still on.

T=Thrust, D=Driven, DD=Double Drive

The double drive factors in the Stochastic Bars Mixed Peak readings to calculate for an extra oomph.

The last one has its box started and the time is ticking for a re-test of the low. 4 hours to go.

(These Plots minus the “T” prints are part of the 88 Luftballons indicator of mine.)


Swing Strength

My latest indicator idea is a scale from 1-4 representing the strength of a move measured by the distance / location achieved by the last fractal move.

The green and the red little squares on the chart, yes.

Notice the break out on the image below, on the left.

Price broke through the red line, got a 4-score and then proceeded to stampede until the range got re-aligned with a new sync high printed (the S1 on the screen).  As soon as the new range was made, there was noting that ever registered higher than a “1” on the upside, but the pullback went to “2” on the downside. This subtle change in dynamics is what I wanted to be able to give new visuals to. The last swing print to the downside was a “1” – that is weak. Remember what happened when there were only 1-prints on the upside.

Other: the stochastic bars hybrid got incorporated into the bottom oscillator (as white star looking things) to save surface. I made a Rebound hedger routine that is based on this signal: if there was a star, it buys / sells the pullback in the next 10 bars. It also crops its own positions when they reach the opposite end on the scale. All RSI2 readings based.

This would be buying the following pullback for instance:

The vertical lines are the “stops”. They are showing the end of an at least 2-sequence run that expanded the range to beyond 1/2 fluctuation size in the last 4 samples. They are my current definitions of end of waves. As you can see, I don’t call everything a wave, anything that remains within the fluctuation cap is not a wave.

The green mesh at the top / bottom of the oscillator is meant to draw attention to an RSI2, 2 or 98 reading on the 4-Hour chart, that is basically an over-rider function: whatever you do, don’t sell / whatever you do, don’t buy while the condition persists.  When the condition is waived, then it is time to go crazy.

(The chart screen plots are all part of the 88 Luftballons routine, and the bottom indicator goes by the name of _RSI2_)

This final image below shows the 2 bounces occurred on the way down, the first, that has a sharpie box high light, was the hedge trade I mentioned above that made a kiss good bye to E-16, and the second bounce – the second sharpie high light – was prompted by the end line (purple) triggered buy box (s1 / support1, s2 / support 2) and was the only move back up that actually made it to a wave status (teal vertical line). It also shows a terminal move line (in black) into the S1 sync low.

(End lines, terminal waves, sharpies and the thick strike out lines are plots of the God Awesome indicator 1.5).


…and the image posted after the last image does show the second terminal wave as well.


Winning the Lottery Every Day

Imagine remembering that the first Forest touch prompts a Forest to E-16 trade, and knowing exactly where the forest is.

Imagine knowing on the 27th of November, what level to cover the shorts at and go long on the 28th of November.

Imagine having an understanding of the inevitable trade, knowing that the “S” print shall not be exceeded on the downside, and a mean reversion was triggered. No matter what the market does between now and two days from now, the price would have reached the 1st target and is possibly going to exceed the second target as well by a smidge.

Imagine knowing and remembering how to count to three. And not forgetting to load up the wagon around the “Sync” low.

Imagine having the whole thing play out an hour later.

You no longer need to imagine being light years ahead of everyone else out there.

This is doable. This is my reality.