Quote from RunItOnce:
Quote from Maverick74:
. To make this simple, if I'm fading something, I better NOT see a +/- 5 or greater on a fade. You are fading LEGIT momentum. If I'm buying momentum (long or short) I better not see a 0 number line.
Is it then viable to use the 5 day to assist in taking certain ACD intraday setups?
Example: +5 or greater and a market makes an A up from a narrow opening range through a narrow pivot zone = a fantastic long setup based on a confluence of ACD layers.
Example: -2 and the market trades from a wide OR to an A up that is engulfed by a a wider than average PZ and begins to fail = a fantastic fade setup.
With just a little creativity I think there is potential for using this kind of filter across a number of products.
As always, let me offer my usual disclaimer, there are probably many more things you can do with ACD that I don't mention here. I can only offer you what I have done, thought about doing or have observed. I have developed some in intra-day stuff for ACD that does not involve the 5 day number line. The 5 day tends to be mean reverting. I think it's very effective in confirming momentum but it's not necessarily saying momentum will continue, it's simply confirming what has already happened. This is true of most TA. TA is giving you a look into the past, not into the future. What you have to do is figure out what patterns and behavior usually surface "given" certain historical data.
Now, let me clarify something else here. When I say the 5 day is mean reverting, I am NOT, repeat NOT saying that it's fadeable. The reason for this as I have pointed out many times, you can have price moving in the opposite direction of the number line, one of the things that actually makes ACD unique.
I think it's very important for one to have a complete understanding what ACD is telling you specifically. The numbers are meaningless if you don't understand where they are coming from. What is ACD telling you about trend, about momentum, about market environment, about volume, about time, about cycles, about noise, etc. You have to listen to the market and develop a good ear. These are not static things with "if/then" statements. ACD really forces you to develop an intimate understanding of the market.
So having said all this, to answer your question, yes, you can do all sorts of things with different parts of the system "provided" that you fully understand what these different parts do.
