Swing Trading the Forex Market

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You will probably be better off using the two-hour price range envelope at 0.07% deviation to gauge where to enter and exit shorter-term intraday positions rather than the four-hour and 60-minute channels.

Make that the two-hour price range envelope at 0.06% deviation to gauge where to enter and exit shorter-term intraday positions rather than the 0.07% level.

You should also monitor the 0.05% deviation levels of the 45- and 90-minute price flow channels, and pay special attention to the possibility of entering positions where one or both of the corresponding bands of these two measures converge with that of the two-hour price flow channel at 0.06% deviation.

 

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Tuesday | April 9, 2024

When it comes to Numerical Weather Prediction (which NPP seeks to mimic or emulate) it's standard to run several simulations of the weather model (known as ensemble prediction) to help meteorologists get a handle on the uncertainty in the atmosphere, and by doing so, arrive at a probabilistic output.

However, because I don't have access to incredibly powerful supercomputers to deal with the huge volumes of data I would ideally have to analyze, what my system does instead is attempt to use the "laws governing the flow of price" in a dynamic manner by adjusting to input data on the fly—in real time.

As I've written in the past, similar to weather conditions, there are any number of factors, or "data points," impacting on price. So, in place of ensemble prediction, NPP heeds the ongoing consensus opinion of all these various factors to determine what a trader should do in the final analysis.

Decisions have to be made based on what each of these determinants means in light of all the others, and on how they all will affect and impact one another. In other words, it is the interpretation of each moving part individually—and of all these assorted components as a whole—that constitutes Numerical Price Prediction.

That said, having spent the last month dabbling with trading commodities, I now plan to spend a little bit of time dabbling with the use of three specific "data points" to facilitate the entry of Forex positions in a possibly more strategic manner. These particular "determinants" consist of the four-, 12- and 24-hour price range envelopes at 0.20%, 0.40% and 1.00% deviation respectively.

To put this particular approach to the test, I'm writing down what it would suggest here to see if it actually pans out, starting with AUDJPY. Because the pair's two longer-term measures are bullish, and seeing as how 1.00.26 currently represents the base of four-hour support, I would not be surprised to see the Aussie-Yen rise from 100.38. However, I would also not be surprised to see price drop to 99.81 before it does so. But, if it falls lower than that without bouncing back, all bets are off and I will expect to see it continue south.

AUDUSD is forecast to head higher as well, but it might first bounce at 0.6605, or even as low as 0.6572. If it fails at the latter measure however, that's it...and I'd have to conclude it's heading south instead.

Presently at 164.62, I expect to see EURJPY eventually head higher unless it fails to face rejection at 164.05.

For EURUSD, currently at 1.0854, its support levels are 1.0840 and 1.0807.

GBPJPY is looking at 191.98 and 191.25 (it's now at 192.15); with GBPUSD (presently at 1.2667) calculating its support @ 1.2651 and 1.2601.

USDCHF was projected to be down by the week's end, and has already delivered an acceptable amount of profit in that regard.

As is usually the case with EURGBP as of late, the pair is hardly worth looking at. As for USDCAD and USDJPY, they are both more-or-less neutral for the time being.

(By the way, now that you're ready to focus on JUST trading, start applying this strategy from Post #26 that you entertained two months ago. It looks legit...)

 

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TUESDAY | APRIL 9, 2024

I want you to see if you can mesh the highs for the day observations from Post #25 with the 45-minute run strategy from Post #26. Here is your initial step...

If the 45-minute price flow (use this instead of the 30-minute price range envelope at 0.20% deviation) violates the contrarian side of the three-hour price range envelope, you've probably just witnessed the three-hour trend reverse direction.

Your optimal entry setup (or at least it seems so at this point) is when candlesticks are forming at the contrarian BAND of the 45-minute measure at the same time they are painting on the contrarian HALF of the sloping three-hour measure—especially if they are so deep into the three-hour channel that they are even making contact with ITS corresponding contrarian band as well.

(Your stop loss will be just outside the contrarian band of the three-hour envelope.)

You're also looking to enter if price is rejected by resistance anywhere between a sloping 12-hour baseline and the corresponding contrarian band of the 12-hour price flow channel IF this happens BEFORE any part of the 45-minute measure breaches the contrarian band of the three-hour price range envelope AND before the three-hour baseline crosses over into the contrarian half of the 12-hour price flow channel. (Either of these events nullifies the potential setup!)

If the three- and twelve-hour measures are both sloping in the same direction, you are just as likely to identify the high or low of the day (as appropriate) by means of the three-hour measure as you are the twelve, if not more so.

Regardless of which direction the two longer-term envelopes are sloping, if the outermost band of the three-hour channel is outside that of the 12-hour measure, then the daily high or low (or at a minimum, the half-day high or low) has more than likely been established as soon as the 45-minute belt ducks back inside the three-hour channel.

And finally, whenever the three-hour measure COMPLETELY exits the 12-hour measure, you should ONLY be looking to trade in the direction these two envelopes are sloping until and unless the three-hour baseline says otherwise (at which point, they will obviously no longer BOTH be sharing the same trajectory).

(But of course, ALL of these guidelines will need to be validated/verified over the next three or four days.)

 

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Presently at 164.62, I expect to see EURJPY eventually head higher unless it fails to face rejection at 164.05.

EURJPY has a bullish 12-hour trend, but the three-hour trajectory was bearish. And since the immediate trend takes precedence, when the 45-minute channel turned south as well, I "had" to sell. Nonetheless, price went virtually nowhere, and in the meantime, the three-hour measure turned neutral. Consequently, seeing as how the longer-term trend suggests the rate will eventually head higher, I adjusted my take-profit level to try to ensure I didn't ultimately end up with a loss, and was therefore able to realize at least about a 3½-pip profit...

I'm presently long AUDUSD, and waiting to see if the pair will follow through...

 

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GBPJPY is looking at 191.98 and 191.25 for support (it's now at 192.15).

The Cable-Yen's three-hour price range envelope is totally outside its 12-hour core. Supposedly this means the pair is destined to head higher until and unless its three-hour baseline hooks south, so I want to test whether or not this pans out.

(I need to lower my take-profit target down to just below the previous highs from the second half of March.)

 

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The Cable-Yen's three-hour price range envelope is totally outside its 12-hour core.

When I woke up this morning at three o'clock AM Pacific Standard Time (1:00 PM MSK) I discovered that EURJPY had just hit my take-profit target only eight minutes earlier for about 26 pip's worth of profit. However, AUDUSD had gone virtually nowhere, so I lowered my goal to get out of the position essentially at break even. (I should have chosen GBPUSD instead and I would have made out quite well. EURUSD would have also been a better selection.)

Fortunately, GBPJPY did behave more in line with what was forecast, offering a roughly 30-pip gain—but I lied! Its three-hour channel was NOT outside its 12-hour core! I suspect that what happened was I clicked on the wrong time frame for the chart configuration that I was using. Such careless mistakes can be costly, so I'm fortunate to have gotten away with it.

Though its a terrible pair to trade right now, if EURGBP continues to drop down between 0.8552 and 0.8530, it will become a buy candidate when and if its three-hour trend turns north once again. USDCAD continues a gradual descent, which is not surprising, but USDCHF remains stuck in the middle of nowhere. (It would become a sell candidate up at 0.9049, and a buy candidate down below 0.9028.)

In any case, today's results seem to confirm that I would be perfectly justified in continuing to use the 40-minute, three-hour (NOT four-hour), six-hour, 12-hour and 24-hour (not consulted during yesterday's forecasts, but it SHOULD have been) as my primary "determinants" when day/swing trading the Forex market (so I will).

 

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Wednesday | April 10, 2024

The impact of the USA inflation rate data recommended (in my eyes) that I pull back and look at the pairs using a broader time frame. I modified the first chart I pulled up so that it only displayed those measures that seemed relevant from a pragmatic/practical viewpoint, and what immediately stood out in terms of suggesting the trajectory of price flow from a week-to-week basis was the two- to two-and-a-half-day price range envelope, which actually required two levels—one for when pairs are trending sharply and the other for when they are not.

The Euro dollar-US dollar is not trending sharply given that it was headed south during the previous three weeks, but appeared to be turning north as of the beginning of this week. That would put "statistical support" at 1.0691, and indicate that I should buy the pair if the four-hour trend turns north anywhere between that level and where the pair is now at 1.0742...

(I will have to hold off on looking at the other nine pairs I follow until I have time later today...)

 

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The Euro dollar-US dollar is not trending sharply given that it was headed south during the previous three weeks, but appeared to be turning north as of the beginning of this week. That would put "statistical support" at 1.0691, and indicate that I should buy the pair if the four-hour trend turns north anywhere between that level and where the pair is now at 1.0742.

I exited my three positions just before the release of economic data this morning, just in case...

EURJPY didn't give me much, only about four pip's worth of pocket change. AUDJPY started heading south, so I had to exit manually, yet it still provided the biggest gain (26 pips) with AUDUSD offering about half that much (14).

 

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Monday | April 15, 2024

Based on performance results from Friday and this morning, I believe I've wrapped up the process of optimizing NPP with respect to swing trading BOTH Forex AND the commodities offered by NADEX (and don't really expect to have anything else to say on the topic).