ANECDOTAL NOTES...
Well, if the
16- and
8-hour baselines are not up to snuff when it comes to providing a money-making treasure map displaying where price is going at the intraday level, it must be the
4-hour baseline that fills this role (within the constraints of the
8-hour price range envelope).
But, it's not that simple. So, I need to have a (provisional) conversation in my head to work out the complexities…the subtle nuances…the intricate details.
I've already recognized the possibility that when the
2- and
4-hour baselines are headed in the same direction, the space between them might constitute prime territory for entering short-term positions, and that I should exit positions when the
40-minute baseline (not included in the above image) turns against me.
But, what about when the angles of the 2- and 4-hour baselines are not aligned? How do I decide what to do then?
Well, when they exhibit conflicting trajectories, consult the
40-minute baseline. If the
40- and
120-minute baselines are both on the same side of the
240-minute baseline, you want to trade in that direction—but ONLY when the slope of the
40-minute baseline matches the slope of the
240-minute baseline.
But, what about when candlesticks begin painting on the side of the 4-hour baseline that's opposite the angle of the slope? How do I know the pair isn't reversing direction? Why not just buy whenever rates climb above the 4-hour baseline and sell whenever rates crawl below it?
Because, if the
40-minute baseline doesn't ALSO cross over to the opposite side of the
4-hour baseline, price is almost sure to undertake the act of mean reversion (regression toward the mean) as signaled by the
10-minute baseline (not included in the above image), which might (or might not) be a good time to scalp a couple of pips worth of profit.
Does this mean I should entertain the possibility that an asset is reversing direction when the 40-minute baseline DOES cross over to the opposite side of the 4-hour baseline?
Yes, it does. But, reject this idea if and when (as soon as) you see the
ten-minute baseline turn back the other way again (or if not, most certainly if the
20-minute baseline (not included in the above image) ALSO turns back the other way again).
NOTE: Other possible confirmation signals to explore include candlesticks breaching the
4-hour price range envelope at 0.20% deviation, and/or a
4-hour baseline lower panel oscillator with a slope reading greater than 0.0109 or less than -0.0109.
By the way, if the trend is strong, you might not see price pull back to the space between the
2- and
4-hour baselines. So, you might have to use the space between the
40- and
120-minute baselines instead, or possibly even the
80-minute temporal support/resistance level (not included in the above image), as appropriate.
Speaking of temporal measurements, what happened to the 16- and 26-hour temporal support/resistance levels?
Forget about them. They're no good for guerrilla trading. No, what you want to focus on are the
8-,
16-, and
24-hour price ranges—NOT the higher-valued temporal support/resistance levels.
And this is especially true when price is bouncing off the upper or lower band of the 8-hour price range envelope, as confirmed by the 40-minute baseline, right?
That's right, based in part by the (lower panel)
40-minute baseline oscillator crossing back below 2.4 from above, or crossing back above -2.4 from below. But, price might not follow through, so be prepared to exit quickly if recommended by the behavior of the
40-minute baseline, or by the interplay between the
10-,
20-, and
40-minute baselines.
Thanks! I'll try out all of this next week.