Numerical Price Prediction Challenge

[expiated]

After languishing for over two-and-a-half days near the first of three, four-day statistical support levels, USDCAD finally opted to turn north, in a big way, following today's releases of economic data...

...leading to a $7,100 net return on NADEX Knock-Outs after risking $2,700...

This came (or comes) after the pair offered a much less substantial return ($1,700) on Tuesday...

 

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TIME TO SUMMARIZE MY OBSERVATIONS FROM THE PAST FIVE YEARS, BEGINNING WITH THE MONTHLY CHART:

On a monthly chart, the five-month baseline confirms the year-to-year price flow, but can be quite late in verifying major reversals in deep or extreme price moves (i.e., radical trends).

So then, the two-month baseline can be relied on to detect such reversals in a much more timely fashion. Nonetheless, it is too sensitive to less significant fluctuations in price action to be trusted to recognize and reflect a rate’s ultimate (i.e., year-to-year) destination.

And in terms of being too sensitive to temporary fluctuations to serve as a valid measure for conveying the overall trend, the monthly baseline, or instantaneous moving average, is even worse. Accordingly, it is probably only useful in terms of tracking pullbacks that might serve as possible entry levels.

The maximum size of a typical monthly candlestick, generally speaking, is more-or-less approximated by the monthly simple moving average envelope at 2.50% to 3.00% deviation.

 

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The measures from Post #222 can be plotted on a weekly chart, with the ADDITION of the weekly baseline AND a monthly (four-week) simple moving average envelope at 5.00% deviation to pinpoint optimal entry and exit levels much more precisely.

The maximum size of a typical weekly candlestick, generally speaking, is more-or-less approximated by the instantaneous simple moving average envelope at 1.00% to 2.00% deviation.

The yearly price flow is roughly (NOT accurately) captured by the 17-week price range envelope at 10.00% deviation (rather the 20 weeks, as one would estimate using the five-month baseline from Post #222). So then, what I am referring to is more then likely the four-month baseline.

The weekly chart configuration adapted from U.S. index charts uses the 16-week baseline instead of the 17-week measure, and the eight-week (two month) measure, as one would expect. But, it also adds the one-, two- and three-and-a-half-week baselines; not to mention replacing the 17-week price range envelope with the seven-week price range envelope at 4.60% and 10.00% deviation, which appears to do a better job of defining the range than does the 17-week measure. (It omits the monthly, or four-week, moving average at 5.00% deviation.)

 

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The three-and-a-half-day price range envelope at 1.50% deviation and four-day price range envelope at 1.25% deviation tend to define the limits of price action in a range-bound market on the daily charts (and even in a trending market, more-or-less, IF I'm looking at my proprietary version of the four-day measure rather than the standard SMA envelopes).

(If candlesticks breakout above or below the upper or lower band of the four-day SMA envelope at 1.25% deviation, it could/might signal the initiation of a run.)

Trending and consolidating/accumulating markets are also suggested by the slope of the (bold blue-violet) three-and-a-half day baseline, with these three-and-a-half and four-day measures conveying price flow from (week to week and) month to month.

And of course, day-to-day price flow is represented by the (dark green) instantaneous moving average.

CORRECTION FROM MY NOTES ON THE WEEKLY CHARTS...

So then, what I am referring to is more than likely the four-month baseline.

So then, what I am referring to is more than likely the four-month price range envelope.[/ATTACH]

 

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The 12-day price range envelope at 6.00% deviation defines the broader, overall price flow on daily charts from a purely month-to-month perspective, with the 40-day envelope at 9.00% deviation doing so in more like a yearly context while also defining the maximum (global) limits to which price might deviate within any given month.

 

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This four-hour chart configuration consists entirely of proprietary indicators. The outside bands define the typical limits of price action in ranging markets (and often in trending markets as well—though often not).

When the top bands of the these two dynamic/adaptive envelopes flatten out, it tends to suggest that price has ceased rising. When the bottom bands flatten out, it tends to mean that price has ceased any descent. When both bands flatten out, you are looking at a market that is pretty much range bound from week to week.

When markets are trending, the contrarian band of the inner envelope more often than not represents a great entry level should candlesticks manage to make contact with or violate this maker/boundary.

When the yellow-green moving average is sloping downward, price is likely to eventually head south (if it isn't already) at least for the time being. If the yellow-green moving average is sloping upward, price is likely to eventually head north (if it isn't already) at least in the immediate future. When the yellow-green baseline and the dynamic/adaptive price range envelopes conflict with one another, odds are that the envelopes will ultimately win out in the end (be proven correct).

When candlesticks insist on painting above the baseline, you can assume price is under the influence of monster bullish momentum. And conversely, when candlesticks insist on painting exclusively to the south of the yellow-green baseline, you can assume price is under the influence of significant bearish momentum.

 

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On a four-hour chart, the week-to-week price flow is tracked by the four-week price range envelope at the 0.90% deviation.

The weekly price range (and monthly price flow) tends to be bounded by the four-day price range envelope at 1.20% to 2.50% (or 3.00%) deviation, but not always. (Compare this to the four-day measure on daily charts.) When it's not, the next level to look for support or resistance (if the pair doesn't reverse direction before then) is at the 6.00% deviation level of the 10-day price range envelope.

However, in this context, I'm more interested in intraday trading. So generally, the longest-range measure with which I concern myself is the (indigo) 16-hour price range envelope at 0.90% deviation. [This measure is closely approximated by the bold (yellow-green) proprietary baseline. You can use either the candlestick version of the 5-unit indicator and/or the moving shadow version of it.] You can also track the 16-hour price flow using the two-hour temporal support/resistance channel.

Ideally, I want to trade in the direction of the slope of the 16-hour envelope, entering positions when there are pullbacks in the (blue) instantaneous moving average(s) such that candlesticks make contact with the far/off/opposite side of the purple eight-hour price range envelope at 0.25% deviation. (This usually corresponds with pullbacks "behind" a sloping bold green baseline.)

Often, I'll want to take profit if and when price reaches the "trend-side" of the same envelope at 0.25% to 0.75% deviation.

(NOTE: The 24-hour "moving shadow" baseline can help confirm fully fledged reversals in the 16-hour price flow.)

 

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ONE-HOUR CHARTS:

For the overall general actionable intraday price flow on a one-hour chart, you're looking at a 5½- to 8-hour SMA envelope. Anything above/beyond this is too slow/lagging.

As a general rule, you'll want to enter positions on the "far/off/opposite/contrary" side of the 5½-hour SMA envelope at 0.30% deviation, and take profit near or beyond the other side—the side corresponding with the trend. Generally speaking, the 1½- to 2½-hour baselines should be helpful with regard to recognizing when price is coming out of such pullbacks.

Also, be on the alert for major reversals in the day-to-day trend at the four-day temporal support/resistance levels. (Reversals in the trend are confirmed by the two-day baseline or SMA envelope.)

The transposed projected maximum daily candlestick length is represented by the 18½-hour SMA envelope at 0.35% deviation.

 

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I'm skipping all the way down from one-hour charts to five- and one-minute charts. (15- and 30-minute charts tend to display too "small" a picture for longer-term trades, and yet, lack the detail and precision required for shorter-term and intermediate trades.)

For now, I'm going to ignore five-minute charts and focus on the lowest time frame I have available, though it was based on these proprietary five-minute chart indicators (see below) that I translated the maximum length of a one-hour candlestick (generally speaking) down to the one-minute context...

Bear in mind however that unlike my notes on the higher-time frames, my observations at this level are not well-established and are therefore subject to change at any time. In any case, based on the above chart configuration, I presently consider the 34-minute SMA envelope at 0.30% deviation to be the maximum limit of price action under more-or-less normal conditions.

 

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On a totally different note... when price action confines itself within the eight-minute SMA envelope at 0.04% deviation, it's a pretty good sign that the market is "dead..."