How To Use Signal Calculations

Daily Signals

As an example, here are the time cycles/reversal days that were calculated since last November:

November 15, 2004 - 0 3 9

December 8, 2004 - 2 0 12

December 30, 2004 - 2 0 10

February 4, 2005 - 2 0 4

March 9, 2005 - 0 2 2

May 31, 2005 - 2 0 7

Each of the 3 numbers next to the dates are calculated based on derived equations which combine may different techniques. The results from each equation/component are weighted to arrive at 3 numbers. If either of the first two numbers is 2 (or higher) there is a big chance of a reversal and those are to be considered possible reversal days. The dates I've included are all the reversal days since November of last year. The last number works best when either a "0" or "1" is calculated in the first two fields and under that condition it usually determines signal/reversal strength. The higher then number the stronger the reversal. A "0" or "1" in the first two fields is normally only good to determine small reversals in the overall trend.

Now, if those dates are compared to the following chart you can see that the calculations are useful, but it's also useful to know EW in order to be able to determine if there will be any overshoot past the actual reversal day. So far it has been found that Wave 3's overshoot the most.

The best way that we have found to use the reversal days is to also look for the strong intraday reversals. December 30 of last year we had a strong reversal day and within the strong reversal day we had a strong intraday reversal signal. It was pretty much a perfect scenario in predicting the high.

1. It's better that on the day of the reversal that the price not rebound strongly right away. Otherwise the low on that day will be overshot by quite a bit. You'll notice that on the reversal days in which the low was retested several times right away the low ends up being broken (such as what happened during the week ending June 10, 2005). Whereas if there was no strong rebound right away and the bottom was retested several times (within 3-5 days of the reversal day) then the low made around these days usually holds. For example, on the reversal day that occured on May, 31, 2005 it would have been preferable that the gap between 2160 - 2200 have been filled right away before the strong rebound (which was not the case).

2. If the the price does overshoot the time target then most likely at one point or another we will see a cycle that will break that price. Using the historical time targets as an example since December 30, 2004 had no overshoot at all that would mean that it's very unlikely that we will see a higher price than (1.3665) for a long period of time. However March 9, 2005 was broken slightly (March 9's high was 1.3422 but on March 11 it was 1.3480 before it reversed) so we would expect in the future that we will see something higher than that. In essense based on this theory we would expect once the major impulsive wave 1 is done that we will see a corrective wave 2 rally to somewhere between 1.3422 - 1.3665.

3. The time target is most likely to hold with little or no overshoot if the days around the calculated reversal day are "0" rather than "1". This is best illustrated using an example of what happened around the strong reversals days mentioned at the start.

Example #1: Reversal Day Is Skipped.

December 6, 2004 - 0 1 5

December 7, 2004 - 1 0 8

December 8, 2004 - 2 0 12 <- Reversal Day

December 9, 2004 - 0 0 10

December 10, 2004 - 0 0 13

Example #2: Reversal Day Is NOT Skipped.

December 28, 2004 - 0 0 13

December 28, 2004 - 0 0 5

December 29, 2004 - 0 0 5

December 30, 2004 - 2 0 10 <- Reversal Day

December 31, 2004 - 0 0 9

Intraday Signals

There are 3 basic rules to using Intraday Signals:

1. It's best not to use them during the Asian session (although on many occations they will work).

2. Enter the trade when the MACD on a 5 minute chart is at an extreme and has already crossed over and the shorter MA is getting ready to touch the longer MA again. An example is shown in the following chart. The 1 minute chart may also be used to fine tune the entry using the same type of strategy.

3. The times are usually accurate to +/- 15 minutes.

************************ DISCLAIMER ************************

The above views reflect those of the author as of the date of publication. They are intended for general information and/or discussion of the topic. They are not intended to be relied upon in any way by any investors in foreign currencies or other investment products. Nothing contained in the material constitutes a recommendation, a solicitation or an offer with respect to the purchase or sale of any currency or investment product. Whilst every effort has been made to ensure accuracy of the information, no liability whatsoever will be accepted by the author whether in contract, tort or otherwise, for any error of fact or omission therein which may lead to any direct or consequential loss arising from any reliance upon or use of this report.

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