Mel Veteran   Posts: 235 Joined: 3/18/2006  User Profile | My view of the market is that all price motion, except for new event caused price impulses, is cyclic. My further view is that only two indicators are in practice, predictive: cycles, since they are relatively stable and thus their contribution to price change can be projected into the future, and Defended Price Lines, since they are long term stable and show you where on the chart things are likely to happen, due to hidden supply and demand. To trade price swings, you trade the dominant cycle (that with the greatest contribution to price movement in the wavelength range that gives you the amount of action you seek. With indicators that tune to this cycle by themselves, you trade hit or miss. Without indicators that portray the cycle clearly (get rid of noise and the influence of longer wavelengths) you get false signals or lose track of phase. The roofing filter indicator I gave you does this well. But you need to tune its passband to the right wavelength. The Spectrum allows you to do this, as do the focused oscillators in ACT 2.0. Using the BB approach means you are looking for a volatility squeeze, supposedly the prelude to a breakout. There are versions of the squeeze indicator published in the forum. For me, a breakout only really occurs when the pool of supply or demand is completely absorbed at a defended price consolidation. Otherwise it may be a false breakout caused by a news event (could also be real, depending on content of the news) , or simply a saunter-out created when cycles that temporarily canceled each other out unwind and price motion continues at a modest pace. Only ACT 2, Ehlers indicators, and Hurst offer meaningful ways to trade the cyclic movement of all charts. They are way ahead of whatever is in second place. Mel | |
