Making Forecasts...
As I've written in the past, Numerical Price Prediction (NPP) is compatible with Edgar Peters' fractal market hypothesis, which views financial markets as fractal in the sense that they follow cyclical and replicable patterns consisting of fragmented shapes that break down into parts, which then replicate the shape of the whole.
Accordingly, using NPP to make forecasts with respect to foreign currency pairs involves the evaluation of a number of parts and an analysis of how they might all fit together to form a whole. Consequently, terminology is required to distinguish between one part and another, and toward that end, I will be using the following to represent the various components of the system comprising the associated forecast models.
(Since NPP is no longer in development, this is part of an ongoing process to arrive at a final [or standard] protocol [or routine] for constructing market forecasts.)
landfall: the
ultimate directional destination of price in terms of the
foreseeable future; recognized as being in
the northern hemisphere if a pair is bullish,
the southern hemisphere if a pair is bearish, or
equatorial if a pair is neutral; (from a day-to-day perspective, landfall is conveyed by the "global belt," which is to say, by the four-day price range envelope)
ocean currents: because NPP also incorporates the idea of cycle theory, which holds that cyclical forces, both long and short, drive price movements and can be used to anticipate turning points; this term will be used to reference where price is headed in relation to the
broadest swaths of area, or belts, being traversed by the
longest cyclical forces observed over the
entire domain of potential values, with the turning points between the upper and lower boundaries of this "global belt" identified as either:
the northern shoreline or
the southern shoreline; (again, from a day-to-day perspective, ocean currents are more-or-less defined by the projected or typical maximum length of four-hour candlesticks)
river currents: this term references where price is headed in relation to the
intermediate swaths of area, or channels, being traversed by cyclical forces
within the longer (or longest) cyclical forces, with the turning points between the upper and lower boundaries of the associated envelope identified as:
the upper riverbank or
the lower riverbank
(Note that projected or potential turning points are
also regarded as levels of "statistical" support or resistance.)
local canal: this is the
immediate directional tendency (or general overall gist) of price flow
in the now (or
in the moment) with the "actionable" price range envelope often oscillating between its upper and lower bands (typically when rates evidence little to no trending); in the context of the daily forecast, it consists of the hourly baseline and its associated envelope, which is plotted by calculating the projected maximum length of one-hour candlesticks
(price) stream: this is the immediate
actionable price range envelope, based on the 20- to 25-minute measures
intraday trend channel(s): the eight- to nine-minute (and/or possibly 10- to 13-minute) price range envelope(s)
short term trend lines: these moving averages trace the fluctuations of price within the intraday trend channel(s)—typically used to pinpoint entry and exit levels—and vary from two- to five-minutes
- For now, landfall is projected to be in the norther hemisphere with respect to EURJPY, GBPJPY, USDCAD, USDCHF and USDJPY.
- The southern hemisphere is currently projected for AUDUSD, EURUSD and GBPUSD.
- Though technically, AUDJPY is just a tad bit bullish, for the moment, I'm considering its landfall to be equatorial, along with EURGBP.
I regard price action as being much too dynamic to make specific swing trade style forecasts. Accordingly, let me just say that in a general sense, I intend to enter positions following reversals in the intraday trend if and when rates meander to the "wrong" side of the landfall measures; which consist of the three-and-a-half to four-day price range envelopes and their associated baselines. But of course, this is not the
only structure I'm watching for as a potential opportunity for making a trade. Nonetheless, it is IS the only one that applies for now.
