Sunday | April 24, 2022 | 7:15 PM
It appears that, hypothetically at least, a trader
could make out quite well (again, theoretically) simply by entering a position every time price crosses the center of the six and two-thirds hours price range envelope. This is because the chance that such a crossing will turn out to be a fully-fledged reversal is just about as likely as it is that the maneuver will turn out to simply be a temporary pullback.
So then, the trick is to monitor whatever price action follows and exit the trade as soon as there is a reversal in the 45-minute trend. This could happen almost immediately, or it could be delayed until a hundred pips down the road, etc.
But wait!
Can one
really base this tactic on the 45-minute baseline? I ask because the 45-minute measure does not even appear in this form on the faster/lower time frame charts—where it is represented by an
envelope rather than a moving average—with the 13- to 26-minute moving averages (the measures that
actually govern exactly when to enter and exit positions—not the 45 minute baseline) navigating or oscillating up and down between the opposing
"riverbanks" of the
envelope. (Forget about the baseline!)
So then, how is this going to work from a practical standpoint, which is to say, when using the faster/lower time frame charts to actually decide exactly when and where to enter and exit positions. The fact of the matter is, you
can’t use the 45-minute measure, because it is just too slow/lagging.
Moreover, basing whether to go long or short on which half of the four-hour or even the three-hour price range candlesticks are forming is also a sure way to guaranty traders will fail to act in a timely fashion. In fact, the
slowest measure that will offer the
minimum amount of accuracy and precision required for this task (i.e., determining market bias/sentiment from a practical short-term trades standpoint) is the 1⅔-hour (100 minute) baseline, which is more of an "ultimate" direction intraday general price flow measure rather than serving as a true baseline.
This means that, in the final analysis, the more immediate intraday trend is conveyed by the 13- or 15- and 26-minute baseline(s). Again, ideally they should match the slope of the 1⅔-hour baseline. Consider also whether price action is taking place on the upper or lower half of the 45-minute price range envelope, and then the three-, four- and six and two-third hour price range envelopes (see the image above).
And then finally, consider in which
direction each of these envelopes is sloping, if at all.
Blah, blah, blah…
This is all well and good, but what I want to know is… is there any way I can use any of it to GUARANTY that I ALWAYS make money from my trades?
If candlesticks are painting in the upper halves of the price range envelopes, odds are that price will continue rising, but not necessarily—
especially if it's already at the top of the range, in which case, there is an increased probability it will reverse direction and fall; though again, there is nothing to
make it do so, or to keep it from climbing even higher, regardless.
Well… if there IS a "Holy Grail" in the bias overlap methodology, I would have to say that it is the 1⅔-hour baseline. As long as this measure is angled upward, a trader should stay long, and vice versa, even if the faster measures are going the other way (or go ahead and lock in the available gains, if desired). They will eventually turn around (or the1⅔-hour baseline will
immediately join them going the other way).
So, in summary, what you are looking to do is enter positions as the 13- through 26-minute and/or the 45-minute baselines reverse direction from a course opposite that of the 100-minute baseline to one aligned with it.
It's as simple as that (I think).
