My new chaos findings implemented in forex trading

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Paul&Paul
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Sneaky thieves at a scene of fire

Postby Paul&Paul » Mon Mar 21, 2011 9:27 pm

Traders estimate that more than $25bn was spent by the richest nations, a great deal of it by Japan, in an effort to drive the Japanese currency sharply lower against the dollar after it soared to a postwar high of Y76.25.

Japan's deputy finance minister Fumihiko Igarashi said: "Our stance remains unchanged that we will take decisive steps against speculators who act like sneaky thieves at a scene of fire."

The central banks' move capped a frenetic week for the world's financial markets, during which Japanese stocks suffered their biggest two-day fall since 1987 crash. Investor pulled $8.2bn from equity funds, and $4.3bn from money market funds in the week to Wednesday.
Before central banks intervened the yen gained 8 per cent against the dollar - salving the pain of the fall in Japanese stocks for international investors but also opening any bargain-hunters to a nasty loss when and if the yen returns to previous levels.

Financial Times, March 19-20 wrote: There is a predictable immediate psychological response to a catastrophy ...

I would like to respond to it basing purely on what I saw when chaos revealed the hidden order. Fumihiko Igarashi could not have been wrong more. I would like to ask Japan's deputy finance minister how he would name those investors who fled the market on February 18-22 dragging the index 190 pips lower and setting a crucial trigger down. How he would name those investors who were fleeing the market on March 10-11 before the earthquake.
There was a predictable immediate psychological response to a catastrophy, yes, of course but that response did not change the mood which had developed earlier, as early as February 18-22. It was not for the sneaky thieves who initialized a massive trigger down a month ago. Once again glance at the chart attached below. There is not the least doubt that the fate of NIKKEI 225 was determined before the earthquake. After the earthquake we only saw a completion of fractal expansion, the expansion initialized one month ago.
We can say more than that. Just because NIKKEI 225 closed at 3.5699 on the day of the disaster, not any arbitrary level but that particular level, we conclude that the slide was not an action of sneaky thieves but the behavior of the whole system, in which there were good guys like Igarashi as well as bad guys. Indeed the minister could not have erred more by making that ridiculous statement which contradicts facts and diverts public attention from graver problems.
The history unfolds in front of our eyes. Never before you had an opportunity to link seemingly unrelated events into one plot and to see the hidden order and the boundaries of chaos. You have seen a crash. I have shown you the borders of it. I presented evidence that the probability of NIKKEI 225 plummeting 25% from the trigger was not 1 to 1 with 100 zeros. In fact it was certain. 100% certainty!
A question remains why investors made NIKKEI 225 slump over 6% before the earthquake. It is much more important than the remaining 19%. Much more.
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Paul&Paul
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FTSE 100

Postby Paul&Paul » Mon Mar 21, 2011 10:10 pm

NYSE LIFFE London FTSE100 index futures based CFD.
FTSE100 completed 4.669 of the trigger down. There is a trigger up setting the nearest target at 5745.


See the exactness of the behavior of the system predicted with a chaotic trigger.
Have you seen more amazing things than that?
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ftse10021.03.gif
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Paul&Paul
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WIG20

Postby Paul&Paul » Mon Mar 21, 2011 10:25 pm

WIG20.
The chart attached shows an upward fractal expansion from the buying area.
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EURGBP reached 8740

Postby Paul&Paul » Mon Mar 21, 2011 10:28 pm

EURGBP reached 8740. Now it struggles below 8723.
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GBPJPY

Postby Paul&Paul » Sat Mar 26, 2011 7:35 pm

The constant 4.6692016091... was discovered by Feigenbaum and
is named after him. Period-doubling cascades observed in an extremely large class of systems (experimental, theoretical, defined by maps or by differential equations) have a convergence rate given by 4.6692016091...
Right of this point, the system can be found in chaotic regimes, as can be guessed from the abundance of dark regions in this part of the bifurcation diagram, which indicate that the system visits many different states. It has many universal properties that are in no way restricted to the case of the logistic map. However, the structure of the bifurcation diagram is more complex than a simple division between periodic and chaotic regions on both sides of the accumulation point of the period-doubling cascade.

You have had evidence that the non-linear dynamical system of financial markets exhibits a universal property of diverging from chaos to order also at the universal rate of 4.6692016091. In some way it contradicts the direction of the flow of time but this paradox was explained earlier. It needs to be emphasized that fractal expansions do not depend on the flow of time, and time as such is not considered a factor in their development. We are ready to accept that there are three physical (observable) dimensions and time is the fourth one. Yet time is not like the other three dimensions. A particle can travel freely in the three dimensions forward and backward but as far as time is concerned no physical particle can travel backward against the arrow of time. Assuming time is really the fourth dimension we should never see fractal expansions I have shown. In fact what we see is a transform which does not require time to occur at all. Prices can jump from one level to a new level in a discontinuous manner. Discrete changes of prices is what we frequently observe in the real world of finance. Yet prices never go anywhere they like, they do not escape to infinity. Of course we are talking about liquid markets and real markets, we are not talking about CDOs, JPMorganOs, Lehman BrothersOs and the like, rolls of toilet paper distributed not free of charge worldwide until a miserable end which alas is not an ending story yet. In this free world of inventions, financial engineering proved particularly catastrophic in terms of social consequences to many, and little or no consequences to the makers. We witness a bureaucratic desire to control the curvature of a banana but graver concepts of morons remain beyond the control of regulators. This moronic stance infiltrates the pockets of average people and cripples the minds of those who could have changed it. From time to time, there is an inexplicable desire to infect healthy and liquid markets with lack of liquidity, in order to gain another $1bn from the unsuspecting mob. The only transparent way of seeing it is here, when chaos reins and provides us with glasses better than for 3D movies. The fingerprints cannot be erased. There is no rubber for it. It is for this particular reason I claim Japan's disaster is the biggest international scandal in the history of atomic energy which involves the stock market and the currency market and their key players.

Days before Japan plunged into an atomic crisis after a giant earthquake and tsunami knocked out power at the ageing Fukushima Dai-ichi nuclear power plant, its operator admitted to falsing repair records. The operator submitted a report to the country's nuclear watchdog 10 days before the quake hit on March 11, admitting it had failed to inspect 33 pieces of equipment in its six reactors there. A power board distributing electricity to a reactor's temperature control valves was not examined for 11 years and inspectors faked records, pretending to make thorough inspections when in fact they were only cursory. It also said that inspections, which are voluntary, did not cover other devices related to cooling systems, including water pump motors and diesel generators. The report was submitted after the regulator ordered operators to examine whether inspections were suitably thorough.

The selling trigger on NIKKEI 225 occurred on February 22, around the time the regulator ordered a report from TEPCO. The selling trigger occurred also around the time an earthquake hit New Zealand. Nikkei 225 crashed 6 per cent already before the disaster. Two weeks after a giant quake struck and sent a massive tsunami crashing into the Pacific coast, the death toll from Japan'n worst post-war disaster topped 10,000 and there was scant hope for 17,500 others still missing. While TEPCO was writing the report investors commenced fleeing the stock exchange market and saved their bacon. You saw the ripples on the pond, I showed you not only the pebble hitting the surface of the water but also the direction it came from. It can be traced back to the finest detail. Today the situation at the ageing facility, located 250 km northeast of Tokyo, is still very unpredictable. Radioactivity in water at reactor 2 at the quake-damaged Fukushima nuclear plant has reached 10 million times the usual level, company officials say.

And now to GBPJPY...
We are interested in seeing the targets based on fractal expansions of identified triggers. Triggers as such are needed for target calculations. Triggers alone without projections are of little use.
A next part of the job is identifying UPO-repellers. Such UPOs may be, and usually are, outside a trigger.
A next part is to refer to the history and compare some targets with older UPOs.
A next part is to state whether the current buying/selling energy is related to some older positions held on the market.
Finally, we endeavour to state which direction is stable and which is unstable. An unstable direction means that a trigger in that direction is going to ignite a farther fractal expansion than just to 4.669.
In short, we need to somehow classify expansions in order to profit from 4.669 to 14.208 rather than from 1 to 4.669. You might have quickly observed that this condition translates into a ratio 3:1 which should be familiar to you from general reading on trading. Incidentally, the theory of chaos supports the notion of a 3:1 ratio. Number three becomes the most important number for every trader. However, in this case it has a different meaning. It is not a profit to loss ratio. It is a profit to profit ratio. It means that we need some positions targeting 3 times farther than the typical 4.669. The theory of chaos suggests that profit taking must not rely on one preset value in every single trade, like 50 pips, but no matter whether we really understand it or not, we should try setting some TakeProfits 3x50pips=150pips. It can always be modified while the trade is open. We need to remember that to satisfy the condition we do not need any extra exposure. In fact we require to have some more stamina from time to time. Intuitively, I claim it to be a very important factor no matter what size your usual TakeProfit is (within a reasonable range, of course). This claim implies that someone's one size of TakeProfit for all trades is a gross mistake and we should learn to implement due alterations. It is also a mistake taking "any profit", a piece of advice frequently found among quick traders. I am shure that a 3:1 profit to profit ratio is completely new to you. It is worth every penny trying.

GBPJPY is in a congested area of six targets within 130.25-130.60. It is evident that GBPJPY struggles upwards yet selling pressure is all too high at the moment. Last trigger was up.
The nearest resistance is at 130.93. I have been able to identify a string of
developments linked to one trigger down from March 24. This expansion is going to lead to 129.79 and then 128.93 some time in the future. Ideally we should look for selling GBPJPY towards 130.81.
I added another chart where I marked the UPOs and the blue triangle which is an important loop and a selling area.
Attachments
gbpjpy26.03z.gif
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GBPUSD

Postby Paul&Paul » Sun Mar 27, 2011 8:41 pm

Recall my earlier post:
GBPUSD has been knocking at the door of sellers who occupied their positions in Selling Street on March 8, the International Women's Day. Actually the street is crammed with them. Selling the cable at such a dear price and to so many, my fair lady. And now they have five houses but not a single castle. Comfort and modern improvements in the houses built by chaos with a roll of toilet paper dangling from a UPO@1.6246.
It is determined by the system that GBPUSD is going to take 1.6246 before all toilet paper is used and water flushed.

The current situation is plotted in another chart. The three UPOs from the downside are repellers now. Keep a note of them. 1.6066, 1.6047 and 1.6009. Some time in the future GBPUSD is going to quietly descend there. Perhaps when the smoke is gone. GBPUSD looks unstable upwards. The nearest target is 1.6219 but there is more than that in the cards.


What happened? 1.6066, 1.6047 and 1.6009. Some time in the future GBPUSD is going to quietly descend there. Perhaps when the smoke is gone. Look just where GBPUSD is now.
Attachments
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EURGBP

Postby Paul&Paul » Sun Mar 27, 2011 8:57 pm

EURGBP has not completed 14.208. It should do so. Some time in the future it is going to decline to the three UPOs: 8761, 8743, 8677. EURGBP also set a target @8741 from the trigger down.
Attachments
eurgbp28.03.gif
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USDCHF

Postby Paul&Paul » Sun Mar 27, 2011 9:05 pm

USDCHF rose to 9201 which is a boundary of two expansions. Last trigger up. No matter where it goes above 9201, USDCHF is bound to return to the marked UPOs: 9089,9082,9065. And 9068 is a 4.669 of the trigger down.
Attachments
usdchf28.03.gif
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Paul&Paul
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WIG20

Postby Paul&Paul » Sun Mar 27, 2011 9:09 pm

WIG20 looks bullish still. It eyes 2856 and 2866, both being 4.669 of two triggers up.
Attachments
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Paul&Paul
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NYSE LIFFE London FTSE100 index futures based CFD

Postby Paul&Paul » Sun Mar 27, 2011 9:19 pm

NYSE LIFFE London FTSE100 index futures based CFD.
FTSE100 completed 4.669 of the trigger down. There is a trigger up setting the nearest target at 5745.
FTSE did more, initially 5808, and more, did 5832 and should do more, 5892.
Attachments
ftse10028.03.gif
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