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Price Forecasting with chaos
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Price Forecasting with chaos

  #481 (permalink)
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The EQ is being formed

Price consolidation is in process

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Price Forecasting with chaos-xau926.jpg  
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  #482 (permalink)
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Continuation

consolidation offer daily scalping oppertunity

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Last edited by John Chen; September 26th, 2013 at 11:48 AM.
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  #483 (permalink)
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Looking for price equilibrium in its chaotic movement is efficient way to trade


Most people agree price fluctuation is random and chaotic, however in reality it consists of equilibrium and chaos

Watching market through linear tools such as MA RSI KD can be very painful or even confused

Chart attached is an example of Chinese stock index futures

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Price Forecasting with chaos-if1011.gif  
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  #484 (permalink)
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Short term view of cash gold

Gold has potenital to edge lower

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Price Forecasting with chaos-xau1101.jpg  
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  #485 (permalink)
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Gold down as predicted


John Chen View Post
Gold has potenital to edge lower


It took a week

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Price Forecasting with chaos-xau1101.jpg  

Last edited by John Chen; November 8th, 2013 at 11:49 AM.
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  #486 (permalink)
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A decisive EQ of Gold

It forms a interesting perfect equilibrium

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  #487 (permalink)
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REVIEW THE GOLD PRICE FROM APRIL

1)On 4/13 J-Chart foresee 1432 would be reached while price was 1526

2)Around end of June Gold dive down to 1180 then reound however the high only reached 1433 almost the same price of previous EQ low 1796---1614---1432

3) There is cave below 1284 need to be filled

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Price Forecasting with chaos-xauusd412-1.jpg   Price Forecasting with chaos-xauusd1122.gif  

Last edited by John Chen; November 24th, 2013 at 11:22 AM.
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Interesting EQ

It takes 8 days to create an equilibrium

Today's move also create a EQ which was unfinished from 11/28

1121.6 looks like will be the target since first EQ did fall through

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Price Forecasting with chaos-xau1202.jpg   Price Forecasting with chaos-xau1202-1.jpg  

Last edited by John Chen; December 2nd, 2013 at 11:52 AM.
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  #489 (permalink)
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Patience is a virtue

Wait for Selling oppertunity once the EQ is formaed

Exit when another EQ is in sight

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Price Forecasting with chaos-xau1212.jpg  

Last edited by John Chen; December 12th, 2013 at 10:37 AM.
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  #490 (permalink)
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Summing up


Hi all,

New poster here. Spectacular forum.

Found this thread while researching the volume profile methodology.

This thread is very interesting - nonetheless, the method is not explained, and the thread reads like self promotion for selling books and software on the make. Nothing wrong in that, but I wanted to mention it as I found odd that at the very beginning Big Mike asks for confirmation that there are no products nor services for sale - and it seems there are (Chen: "if you are interested you can borrow my book from amazon.com").

Whatever, to each his own. I learned from this thread and am very thankful to ecmf/Chen for that. Nonetheless, I am filled with unanswered questions and criticism regarding this method.

This method's practical key is triangle formation. So then it is paramount to have a method for constructing triangles. That is the key question.

Quoting Loxics:

loxics View Post
How does the program know how big each triangle data size should be? Do you define it or is it automatically generated for you with different data size per each vertical slice? Also how is the horizontal spacing (varying differences in vertical slice spacing) not affect the BP? If you combine different triangles with its own arbitrarily determined triangle data set (since no time unit interval is consistent), the larger triangle you draw that combines two triangles will have a Image Point (support level) be also arbitrarily set. To say it in other words, how you group each triangle data and how u define the triangle size also change the expected Image Point in the end, no?

The answer was: "A triangle is created with a high/low/BP with another BP, The software will combine ticks with user-defined interval and the user can then find his required equilibrium. The size of a triangle required is determined by the objectives of a user and his trading time frame. Longer trading time frame will mean a bigger eq." And another explanation by ecmf: "the triangles are only drawn once we have identified our equilibrium, for a triangle to be drawn we need a point of origin ... we need to find equilibrium by looking at the display of raw prices using non-fixed time intervals."

Summing up
1) Objective: forecasting price direction
2) Tool: triangle formation (in simplified terms)
3) How 1: A triangle is created with a high/low/BP with another BP.
4) How 2: It is not based on fixed time interval - but rather determined by trading objectives and time frame (aka whatever the trader wants it to be)
5) Circularity: a triangle is formed with the high/low/BP, the high/low/BP are set when the trader decides to form the triangle.

=> Conclusion: there are countless triangles and countless support/resistance levels, just as traditional technical analysis can generate countless support/resistance levels. It all depends on the trader's artistic ability to end one interval and start another.

Am I missing something?

Three other things:

a) This method is based on Tick data (# of trades), as compared to Volume data used by the Market Profile Indicator. ecmf/Chen highlight the importance of this, and state that Tick data is better for this analysis - but they do not explain why. Would you care to elaborate why? I do not see the significance in using Tick data vs using Volume data. In fact, it could be argued that using Volume is more relevant: eg., it is more important to know the total volume in stops that would be triggered at a certain price level, than to know the number of traders positioned at that price level.

b) There is no "real" tick information in FX - in FX tick data is a measure of quote changes, and not # of trades (nor real volume). So how is this method relevant to FX? Even if it were relevant, the interpretation for FX and futures should be different. Nonetheless here the method is applied indistinguishably to both.

c) Some would argue that FX volume can be accurately estimated from FX tick volume - even though I doubt the accuracy of the estimate, assuming the estimate to be reliable, that would only provide a glimpse into retail volume, while most volume is driven by Hedge Funds, Real Money, Interbank trading and Large Corps (specially HFs, given that they like to trade in size to move the market), and these are not reflected in retail volume. This of course is a source of heated debate, and I would rather keep it out of this thread - but it is worth mentioning.

Thanks

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