This picture below shown 1H chart that have been zoom out, to observe what happen in SMA 480.
After chart is zoom out, seen that SMA 480 being consolidation, after the trend is down sharply before (See yellow line).
There are 3 movement patern Up, Down, and Flat. The most important thing to observe is Flat movement patern, because from this patern price will starting to move Up or down. Then at flat movement patern in mathematically and statistically the boundary movement is easy to predict.
as mention before, from analysis that have did there are two important information:
For example : in the case of GBP/USD that is being analyzed, because from 3 point reference that used just SMA 480 which is in flat condition, thus we will use Boillinger Band (BB) with 480 period, deviation 2 (standard) and apply price to Weighted (HLCC/4). Let try use BB in H1 GBP/USD chart, for easier use the same color as SMA 480 that is yellow but the type of line we use dashed.
Its look like :
There are 3 movement patern Up, Down, and Flat. The most important thing to observe is Flat movement patern, because from this patern price will starting to move Up or down. Then at flat movement patern in mathematically and statistically the boundary movement is easy to predict.
as mention before, from analysis that have did there are two important information:
- price movement prediction
- limit of price movement prediction
For example : in the case of GBP/USD that is being analyzed, because from 3 point reference that used just SMA 480 which is in flat condition, thus we will use Boillinger Band (BB) with 480 period, deviation 2 (standard) and apply price to Weighted (HLCC/4). Let try use BB in H1 GBP/USD chart, for easier use the same color as SMA 480 that is yellow but the type of line we use dashed.
Its look like :
For more detail, this is GBP/USD picture from H4 Time frame,
The picture above is not different with H1 time frame chart, but it use different period, there are:
Standard Deviation that generally used is 2, because from statistical calculation result against a group of data known that 96.5% values of a group of data which is observed will locate in range calculation with standard deviation is 2.
Therefore can be concluded that when price touch upper line BB Level or lower line BB, its mean that (possibility) price movement will reverse. But, keep in mind this is occur for the data that with static movement not dynamically, hence BB period that used adjusted with reference point price movement period in flat condition.
From BB 480 that plotted in GBP/USD chart with H1 Time frame (see the picture no. 2) can be seen that since January 22nd, GBP/USD only move in certain range (the term that used by KG is "only playing") in BB 480 area. And price condition at this moment GBP/USD have touched upper line BB 480, meanwhile SMA 480 is still in flat condition. From the theory about standard deviation above, can be concluded that the price have reached 96.5% of GBP/USD price that may be achieved based on SMA 480.
Based on this condition we have predicted that price will move down if the price at that time have been stand in upper line BB 480, but based on KG suggestion, we shouldn't act based price position but always use reference points to take action. Thus, the price can be predict down if SMA 24 which is represent daily movement move down too or SMA line is pointing down.
In order to know that the price would not turn up or back up, it can be observed from SMA 24 line, it can be predicted that prices will move higher if SMA 24 line reach and pass through the Upper Line BB 480. Notice when the price moves in the range of BB 480, seen that SMA 24 line have never through the Upper or Lower BB 480 and always remember the daily movement is described by the SMA 24.
If the prediction is right and the price goes down, then the first target is the SMA 480, but it can only be ascertained if the price is below SMA 120 and SMA 24 is also under the SMA 120.
In summary, this has been got information about the direction and the limits of price movement, and this is consistent with the purposes of analysis. Then for right open position (OP) from GBP/USD example in this condition is BUY if the price is above the Upper line BB 480 and SMA 24 reach or pass through the upper line BB 480, and SELL if the price go back in below upper line BB 480 and SMA 24 is pointing down, and maybe we can add SMA 8 (8 hour price movement) in chart. Noticed the crossing from SMA 8 and SMA 24 to Open Position (it will explain in next post).
To determine SL (Stop Loss) we can use the Upper / Lower line BB which is also used as the basis for determining the limits of price movement. So if OP Sell then use the Upper Line BB as limit of SL plus spread + 1 points. And first TP (Take Profit) was used is middle BB.
- Red line represent daily movement with SMA period is 6.
- State Blue line represent weekly movement with SMA period is 30.
- Yellow line represent monthly movement with SMA period is 120.
- Blue line represent yearly movement with SMA period is 1440.
- Yellow dash line is Boillinger Bands 120.
- Blue dashed line is Boillinger Bands 1440.
Standard Deviation that generally used is 2, because from statistical calculation result against a group of data known that 96.5% values of a group of data which is observed will locate in range calculation with standard deviation is 2.
Therefore can be concluded that when price touch upper line BB Level or lower line BB, its mean that (possibility) price movement will reverse. But, keep in mind this is occur for the data that with static movement not dynamically, hence BB period that used adjusted with reference point price movement period in flat condition.
From BB 480 that plotted in GBP/USD chart with H1 Time frame (see the picture no. 2) can be seen that since January 22nd, GBP/USD only move in certain range (the term that used by KG is "only playing") in BB 480 area. And price condition at this moment GBP/USD have touched upper line BB 480, meanwhile SMA 480 is still in flat condition. From the theory about standard deviation above, can be concluded that the price have reached 96.5% of GBP/USD price that may be achieved based on SMA 480.
Based on this condition we have predicted that price will move down if the price at that time have been stand in upper line BB 480, but based on KG suggestion, we shouldn't act based price position but always use reference points to take action. Thus, the price can be predict down if SMA 24 which is represent daily movement move down too or SMA line is pointing down.
In order to know that the price would not turn up or back up, it can be observed from SMA 24 line, it can be predicted that prices will move higher if SMA 24 line reach and pass through the Upper Line BB 480. Notice when the price moves in the range of BB 480, seen that SMA 24 line have never through the Upper or Lower BB 480 and always remember the daily movement is described by the SMA 24.
If the prediction is right and the price goes down, then the first target is the SMA 480, but it can only be ascertained if the price is below SMA 120 and SMA 24 is also under the SMA 120.
In summary, this has been got information about the direction and the limits of price movement, and this is consistent with the purposes of analysis. Then for right open position (OP) from GBP/USD example in this condition is BUY if the price is above the Upper line BB 480 and SMA 24 reach or pass through the upper line BB 480, and SELL if the price go back in below upper line BB 480 and SMA 24 is pointing down, and maybe we can add SMA 8 (8 hour price movement) in chart. Noticed the crossing from SMA 8 and SMA 24 to Open Position (it will explain in next post).
To determine SL (Stop Loss) we can use the Upper / Lower line BB which is also used as the basis for determining the limits of price movement. So if OP Sell then use the Upper Line BB as limit of SL plus spread + 1 points. And first TP (Take Profit) was used is middle BB.
No comments:
Post a Comment