Can You Define This Wave?
One of the biggest challenges we
face as traders is defining exactly what price information means something and
what is truly random and meaningless. All we have at our disposal is a 2
dimensional candlestick chart that is somehow supposed to map behavior in a multi-dimensional
environment, and give us answers that can make us consistent money. What could
possibly go wrong?
So, how does the “Long Term –vegas
Big Bang Algorithm” map momentum and give us an edge?
First of all, the weekly open
demarcation will allow us to stay on the side of the market most likely to
succeed in making us money. The proof of this [specifically in gold, but other
markets as well with slightly different ratios] is that the distance from the
high value to the open versus the distance from the
low value to the open, as a ratio is greater than 4 / 1.
Once we have this information, we shift our attention to
trying to be in the market when momentum moves take us in this favored
direction; i.e. the yellow and plum lines and the crossover.
How I define this momentum is key, and isn’t what you think
it is. What is important here is NOT the force of price per se, but the
angle [or ratio] at which extreme price [measured from the LOW] maintains or increases over a
specified Fibonacci time frame.
I’m going to use some examples from GBPJPY from this past
week; there are some textbook examples of the power of the algorithm. You will
get these same types of formations in all markets you may trade.
The entire week was in the “green”, so traders in GBPJPY
were looking to get long on the plum line over yellow line crossover. What I
want to concentrate on is not the wave upward, but the cross under that would
get you to either hedge up or liquidate.
Here is an example of the cross going under [highlighted in
blue] from the 5M candlestick:
How many 5M candlesticks from top to the bottom does this
minor correction take up? Answer: 11
Directly above is the same time period in GBPJPY using the 1M
candlestick chart; highlighted in blue is the time [in minutes] of
the entire correction. How many minutes is it?
Answer: 54
A few hours later, on the same day [11/15] GBPJPY had another
correction. Directly above is the condensed 1M candlestick chart from top to
bottom. The first white arrow is the top, the first yellow arrow is the 55th
minute, the second yellow arrow is the 89th minute, and the last
white arrow is the 144th minute.
In both examples, prices quickly rebounded after these
corrections.
Here is the start of the Fibonacci sequence:
1,1,2,3,5,8,13,21,34,55,89,144,233,377,610,987, etc.
Of course, after the number 3, every number has as its ratio
to the one before the number 0.618. This is the “golden ratio” that so many
things in our universe have at its core; seashore lines, cloud formations,
mountain tops, seashells, and the list goes on.
So, where exactly did the market start its up moves again?
In the first example it was the 55th minute, and in the second
example it really got going with an explosion in the 145th minute.
So many times, in almost every market, corrections [in time] can be
mapped to the Fibonacci number sequence above. I urge you to do
some research on your own and confirm this.
Now, from correction to correction we don’t know where the
end will come; it could be the 8th minute, the 34th minute,
or even the 144th minute [like the example above], but what we do
know is that the ratio of the last 3 lows to the ratio of the last 9 lows
[exponentially] will allow us to be very close to this turn NO MATTER THE FIB
NUMBER.
One of the very best Gann publications you can have in your
library is “The Definitive Guide To
Forecasting Using W.D. Gann’s Square
of Nine” by Patrick Mikula.
The entire 209 page publication I have in PDF. If you would like a copy, drop
me an email at vegasalgo@yahoo.com
Have a great day everyone.
-vegas
P.S.
To enlarge the charts on your screen, simply double click
your mouse over the chart and it will enlarge to screen size for better
viewing.
P.S.S.
Today is a very special day.
To Bert, May the Lord always bless and keep you close. You will always be the master and I the student. Your loyal friend forever. -vegas
P.S.S.
Today is a very special day.
To Bert, May the Lord always bless and keep you close. You will always be the master and I the student. Your loyal friend forever. -vegas
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