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50% Balance Point Rule
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50% Balance Point Rule

  #11 (permalink)
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Do not see any impact of balance point here

Hi perryg,

Just for the fun of discussing this from a different perspective: I had a look at your charts, and as I am not easily convinced, I would like to present an alternate view on price action here.

If I look closely at the 6E chart, I find three downward spikes, which can be explained as follows:

(1) Price stops 1 pip above yesterday's close, as shorts exit their positions
(2) The second swing down stops at 1.3600, which is a round number, 3 pips above the main pivot PP and also is a measured move down, as the first swing of the ABC correction measures 49 pips and the second one 54 pips.
(3) The third and final spike down is just a few pips above the 61.8% retracement of the prior swing up. It is a perferct Gartely 222 pattern and you would expect a powerful upmove afterwards, which occured.

I do not see much of an impact of the balance point, actually it is just the the 50% retracement of the prior swing, and these are not high probability retracements.

Now the 6B chart: If I draw the balance point at the time you saved your chart, the balance point would have been around 1.5389 and not at 1.5402, so already I do not understand, how you calculated it. If I look at the 6B chart, these are my observation

(1) the main spike downward stopped at yesterday's close / yesterday's volume-weighted average (VWAP), just below the main pivot PP.

(2) the second spike stopped at 1.5400, which is a round number and the midline of the range created by the large red downward expansion bar.

The correct balance point at 1.5389 had no impact on price action.

The balance point is more of a rule of thumb, which gives you the midrange in case that yesterday's and today's price action was ranging, but I would not use this as a support level in an up- or downtrending market. to enter pullback trades.

Attached Thumbnails
50% Balance Point Rule-6e-06-10-30-min-14_04_2010.jpg   50% Balance Point Rule-6b-06-10-30-min-14_04_2010.jpg  
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  #12 (permalink)
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Hi Fat Tails,

Thanks for your insight, but I think you have gone way off the idea of what the 50% Balance point is and how it is used.

1. When the currently traded price is above the 2/3 day BALANCE POINT it is in a STRONG POSITION
2. When the currently traded price is BELOW the 2/3 day BALANCE POINT the market is potentially in a WEAK POSITION.

In most strong UP trending market moves the price retracements (corrections) should not come back below the 50% level of the prior 3 day range. If they do then the degree of wave in progress has moved to a higher degree wave movement. If the market does not correct more than 38.2% of the 3 day range it is in a far stronger position of trend.

You can also use the 50% Balance Point to trade off. Take a look at the attached chart from today of the 6E, and you will see that there were a number of great opportunities to JUST TRADE OF THIS LINE. This is not rocket science but a very useful indicator to put on your chart daily. Some days you can use it and some not. If I am in a trade, and we are heading towards this line, it is a great point to EXIT the trade. So there are a number of ways to use this line, also to ENTER and also to EXIT.

The line for today was taken from the Highest HIGH of the 12th and 13th April, and the Lowest LOW of these days. i.e. (1.3681 + 1.3546) /2 = 1.3613

I hope this explains what I am doing with it.

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50% Balance Point Rule-todays-50-balance-point-6e.png  
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  #13 (permalink)
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Where is the balance point?


Hi Perry,

first of all, thanks for your answer. But again I am not understanding what you are doing yet...

First, your balance point is at 1.3613. Where did you draw this from? If I draw a balance point on my chart from the last 3 days (which is the trading range), I will get my balance point at 1.3620 (yellow line in the chart below). This is a midrange line and acted as support in the morning.

Now the interesting line is at 1.3603 (green in the chart below), because this is

- a balance point (= 50% retracement) calculated from yesterday's low and the running high in the morning
- a 38.2% retracement line of the downswing that ended with yesterday's low

So it is a fib confluence line of two retracements.

What am I missing? I cannot find your balance point....

Fat Tails

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50% Balance Point Rule-6e-06-10-60-min-14_04_2010.jpg  
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  #14 (permalink)
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Hello Fat Tails,

You are correct the EXACT number is 1.3620. A difference of 7 pips over 2 days is neglegible. What I need is a line in the sand.

From my previous explainations you can see from "take1", that there was a retrace of 50%, and the market today CONTINUED UPWARDS in an UP TREND. This is exactly according to my explanations of how it should react if it does not do more than 50%.

From "take2", you see that it bounced around this line, hitting it perfectly twice, and then went off to the races.

Without any other indicator, you had fantastic trade opportunities by just using this ONE LINE.

I am trying to make life so simple, and I think that you are looking for something that is not there. Trade simply.

Attached Thumbnails
50% Balance Point Rule-take1-6e.png   50% Balance Point Rule-take2-6e.png  
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  #15 (permalink)
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JUst a different picture

Hi Perry,

I don't disagree, just want to give a different picture: I saw an ABC correction. which formed a perfect bullish Gartley pattern.

If I draw fib confluence zones (via indicator), the 50% line is just one of those that created support.

The main line for the harmonic pattern was the 61.8% line below, and it offered a better reward-to-risk ratio and more trading opportunities....

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50% Balance Point Rule-6e-06-10-5-min-14_04_2010.jpg  
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  #16 (permalink)
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alrite this balance line indicator will draw a 50% line of of days back, you can specify how many days. It will start drawing when there is data for a current day, thus for ES you will not see any line until Sunday 6pm. However I mark the H and L with triangles so you can verify them.

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Register to download File Type: cs BalanceLine.cs (8.0 KB, 35 views)
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  #17 (permalink)
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Thanks Cory. As I can only test this when the markets reopen on Sunday/Monday, I will then report back to you my findings.

I did see that you use a Date format of "MM/dd/yyyy". All my machines work on the format of "dd/MM/yyyy". Should I change this in the code, or can you add a snippet of code that will check the windows format and use it as its variable.

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  #18 (permalink)
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actually this version shows the balance line keep in mind if you don't see enough days just increase the day number. it still doesn't work for ZB, FDAX I think it has something to do with the data format. As far as date format I have no idea if you see the triangles then it's all good.

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Register to download File Type: cs BalanceLine.cs (8.3 KB, 29 views)
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  #19 (permalink)
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OK, its seems to work. I see on a number of charts already. I have put the number of lines back to more than 2 but there is still only one line. I will test it again. How do I differenciate on the chart which line is from 2 days ago, 3 days etc. Is there some sort of text or color.

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  #20 (permalink)
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repeat it for each set of days, i will add color selection next.

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