My new chaos findings implemented in forex trading

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Paul&Paul
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EURUSD

Postby Paul&Paul » Sun Feb 20, 2011 10:08 pm

Let us see what is going on on EURUSD.
There are three UPOs from the upside @ 1.3754, 1.3777 and 1.3791 to be revisited. And there is enough energy to get there. 4.669 of an important trigger is 1.3802.
On Friday EURUSD revisited a UPO@ 1.3710. That movement was very important and well founded by the dynamic of a chaotic system. We may see some of the recent gains retraced keeping in view the UPO@ 1.3660.
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GBPJPY quick glance

Postby Paul&Paul » Tue Feb 22, 2011 5:08 pm

GBPJPY dipped twice to 133.61, not exactly pip-to-pip but let's wait and see. More update to come.
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GBPJPY drama

Postby Paul&Paul » Tue Feb 22, 2011 5:37 pm

A new small trigger up 9 pips times 3.5699 yielded 135.47. Viewing the candlework prior to the sharp shoot up it was really hard to intuitively anticipate 135.47, for most of the time then GBPJPY looked like on an idle gear slipping down a winding country road and suddenly it did 3.5699. Only to say goodbye to 135.47 and to blow the whistle for a dramatic retreat. That was not the end of the drama as GBPJPY "suddenly" remembered where it was set to go sooner or later, chosing sooner, actually now.
GBPJPY broke through tough support of four lines, four UPOs, four targets from some earlier action. And it did not matter that the market soared to 135.47 first.
If that was someone's invention, you can imagine that you can do it with a very sound margin only. Let us admire the precision of this game.
There is more to come...

GBPJPY is yet to touch three UPOs (133.16/22/31) from February 10. It is going to test those levels some time later.
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Paul&Paul
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NZDUSD deserves attention the most

Postby Paul&Paul » Tue Feb 22, 2011 8:13 pm

NZDUSD deserves attention the most because my prediction based on the theory of chaos published here on Sunday clearly pointed to a dramatic slide downwards and when I realized the distance I wanted to be on the moderate side of the scale I inserted only 3.5699 of the trigger. Just this morning I read a report of a powerful 6.3 magnitude earthquake hitting Christchurch on New Zealand's South Island. The tremor hit at 23.51 GMT and caused many casualties and widespread destruction. The country experiences more than 14,000 earthquakes a year, of which only around 20 have a magnitude in excess of 5.0. The last fatal earthquake was in 1968, when a 7.1-magnitude tremor killed three people on the South Island's western coast.
We all feel very sorry when a disaster of this magnitude happens all of sudden and so many people die.
Earthquakes are natural phenomena. Scientists have still some problems with detecting the danger in advance in order to issue a warning and give people a chance of fleeing the area of tremors. It has been observed that some animals behave strangely prior to an earthquake. They can sense the danger somehow.
So far noone has observed people capable of sensing such a danger. At least not for any practical purposes. One of the reasons could be that (unlike animals living in herds) people have no opportunity to express their feelings, anxieties in a crowded form. With one exception though... except for the market. Financial markets reflect all feelings and anxieties. Could it be the case with the kiwi that crowds really had sensed the danger before it happened?
The fact is that the market (NZDUSD) ended last Friday with a clear trigger down. We need to remember that chaotic systems are natural systems after all.
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GBPUSD

Postby Paul&Paul » Wed Feb 23, 2011 2:59 am

There is a bundle of targets from different triggers @ 1.6240, 1.6244, 1.6250, 1.6253.
GBPUSD looks like going up to break through.
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GBPUSD at a glance

Postby Paul&Paul » Wed Feb 23, 2011 9:40 am

GBPUSD has broken higher as shown in my previous post.
The four lines 1.6240/44/50/53 form a bundle. The way GBPUSD behaved there highlights the importance of the area. Be it options, be it something else, does it really matter whose interest was at stake? We are here to see the nature of the dynamic system and we always seek confirmation that the system is sensitive to some price levels more than to the others in an evident way. Some developments
can be translated into practical trades.
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EURUSD

Postby Paul&Paul » Wed Feb 23, 2011 9:04 pm

There are three UPOs from the upside @ 1.3754, 1.3777 and 1.3791 which were to be revisited. And there is enough energy to get there. 4.669 of an important trigger is 1.3802.
On Friday EURUSD revisited a UPO@ 1.3710. That movement was very important and well founded by the dynamic of a chaotic system. We saw a massive slump ways below the UPO@ 1.3660 but finally EURUSD returned to the path towards higher notes.

1.3554, 1.3777 have been taken. It is not enough in this leg of rises.
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EURJPY

Postby Paul&Paul » Thu Feb 24, 2011 10:42 am

Just a few things about EURJPY.
It looked like poised to go to 113.72 and 114.20. And it did indeed in a precise manner. The hidden order can be seen now in the form of borders and reactions to borders. Sometimes very sharp reactions. Sometimes extraordinarily dramatic reactions on the border of crash. The hidden order is there, inside, and it is an intrinsic order of the system involved. The rules remain the same, the pictures of a secret order are different for different segments of the market. EURJPY gives a different picture than EURUSD but the rules cannot change. They are universal for every bit of the market. They do not change with time. They are the same this week, they were the same last week, and they are the same for next weeks' happenings. Markets undergo different transformations but the core of the truth about them is that they must obey strict rules and even very simple iterations can lead to very complex results. N goes to infinity. Remember limes? Infinity versus zero. Almost every half an hour during a trading session tick-volume measures something important and the number can be 2000 for this EURJPY, or less or more. In fact, it is enough to accumulate to a much bigger number, much closer to infinity than just now. You understand now, as I do, that the limit multipliers like 3.5699 and 4.669 need some time before they really become exactly 3.5699 and 4.669 after the formation of a trigger. Until then these multiples are changing, evolving in a series of numbers, approaching 3.5599 and 4.669 and suddenly they become exactly 3.5699 and 4.669 and the evolution of the system proceeds more smoothly. Every trigger is an independent event. That is why the market may look very messy and very difficult to decipher. We cannot expect a movement of 4.669 times the trigger to happen in just half an hour. That would be very unnatural. It is remains to be verified whether the size of the trigger determines the length of time needed for 3.5699 and 4.669 to become really what they are when n approaches infinity.
Below study the chart of EURJPY with 114.20 added and the elipse of projection from the trigger which caused this movement. Kindly notice 200-pip slide thereafter.
So much more to enjoy.
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EURCAD

Postby Paul&Paul » Thu Feb 24, 2011 12:45 pm

I would like to come up with an update of EURCAD in order to see what, as of today, has been important in the dynamic of the system. From the downside 1.3284 and 1.3287 set borders, almost identical in level but from two different triggers. 1.3284 is equal to 9.1299 of a trigger from February 8. 1.3287 is a fresh low marking a key number in play. What we are seeing is that EURCAD has generated a trigger up (on the left) which incorporates both those levels. Buying occurred from 1.3274 to 1.3310, confirmed and reinforced by another spree on the right which lifted prices above 1.3369.
Both the big triggers up determined the same target level 1.3643 though obtained with different multipliers (9.1299 and 3.5699) applied. If you looked back you would see that what 1.3643 means to the market. February 9/10 marks a very heavy selling. The idea of the current effort is to go towards that level and crush shorts. The system has initialized a process, precise in energy to get there some time in the future. This is already determined in the system and by the system. As stated before, the road to a goal is never a straight line and the time needed to take 1.3643 can be made much longer by pushing the prices below 1.3287.
I would like to come up with an update of EURCAD in order to see what, as of today, has been important in the dynamic of the system. From the downside 1.3284 and 1.3287 set borders, almost identical in level but from two different triggers. 1.3284 is equal to 9.1299 of a trigger from February 8. 1.3287 is a fresh low marking a key number in play. What we are seeing is that EURCAD has generated a trigger up (on the left) which incorporates both those levels. Buying occurred from 1.3274 to 1.3310, confirmed and reinforced by another spree on the right which lifted prices above 1.3369. Both the big triggers up determined the same target level 1.3643 though obtained with different multipliers (9.1299 and 3.5699) applied. If you looked back you would see that what 1.3643 means to the market. February 9/10 marks a very heavy selling. The idea of the current effort is to go towards that level and crush shorts. The system has initialized a process, precise in energy to get there some time in the future. This is already determined in the system and by the system. As stated before, the road to a goal is never a straight line and the time needed to take 1.3643 can be made much longer by pushing the prices below 1.3287.I would like to come up with an update of EURCAD in order to see what, as of today, has been important in the dynamic of the system. From the downside 1.3284 and 1.3287 set borders, almost identical in level but from two different triggers. 1.3284 is equal to 9.1299 of a trigger from February 8. 1.3287 is a fresh low marking a key number in play. What we are seeing is that EURCAD has generated a trigger up (on the left) which incorporates both those levels. Buying occurred from 1.3274 to 1.3310, confirmed and reinforced by another spree on the right which lifted prices above 1.3369. Both the big triggers up determined the same target level 1.3643 though obtained with different multipliers (9.1299 and 3.5699) applied. If you looked back you would see that what 1.3643 means to the market. February 9/10 marks a very heavy selling. The idea of the current effort is to go towards that level and crush shorts. The system has initialized a process, precise in energy to get there some time in the future. This is already determined in the system and by the system. As stated before, the road to a goal is never a straight line and the time needed to take 1.3643 can be made much longer by pushing the prices below 1.3287.


Down below I added a new chart with 1.3643 marked near the top to highlight the significance of the recent movement there. Once again it is important how the market reacts nearing the level. M30 candlework shows stop losses triggered there, and once it was done, the prices retreated in a decisive way.
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GBPUSD

Postby Paul&Paul » Sat Feb 26, 2011 1:58 pm

I have a beef with economists who model prices for currencies using variations on so-called random walks, which assume that the price at any given moment depends on what it was a moment before. Even Mandelbrot suggested something what he called mild-randomness. Yes, prices can be discontinuous jumping instantly from one value to another without any graduation transition - more like a random teleportation. Prices do not have any element of physical inertia.

What we actually see is not necessarily the same as what actually is there to see. This statement instantly raises the question whether it is possible that our eyes are tricked, and if so, what the trick is and what to do in order not to be deceived. Our mind is famous for making short cuts, for being able to simplify complex phenomena and for seeing patterns which objectively do not exist. Our mind is notorious for making judgements from superficial things. It makes life nothing but easier. This is what an average man does. This is what the crowd does. This is what generally people do. And generally people are very far from being millionaires. Who wants to reverse the Pareto proportion 20:80?

Charts are nothing else than a 2-D map. Everything orbits around happenings drawn in a 2-dimensional space. Are markets really like that? No. They are not trivial 2-dimensional price movements, as seen for example by Elliott. I mean they are 2-dimensional in the outcome, but charts are also and first of all a projection of an n-D space onto a 2-D space. We actually see various projections of dynamical processes taking place in an n-D space onto a 2-D space. In a simple and informal way we can say that charts contain too many things and the desired details become clouded by other details. Clouds over clouds force us to stick to mere contours which are known as local extremes, local highs and local lows. The problem is that even then we cannot be shure that some highs and some lows belong to the same dynamical process. Markets do not forgive mistakes.

An equilateral triangle is an example of a 2-dimensional object.
A regular tetrahedron is an example of a 3-dimensional object.
A projection of a regular tetrahedron onto a 2-dimensional space gives a triangle or a polygon with four vertices.
A projection of a regular 4-dimensional object (simplex) onto a 3-dimensional space gives five 3-dimensional tetrahedrons and ten 2-dimensional triangles and ten 1-dimensional segments.
A non-linear dynamical process taking place in an n-D space can be reduced to a process in a 4-D space and mapped onto a 2-D space.
Again, said in an informal way, there can be five 3-dimensional trajectories and ten 2-dimensional trajectories of (price) changes. The existence of Feigenmabum value 4.669 in financial markets proves not only chaotic properties of the system but more importantly plays a crucial role in modeling the projections and reducing them to a workable and practical number. You already know that from the point of view of chaos, there is more than one way up, and also more than one way down. So the game is about transforming spaces. Order is more important than time. Topological invariants are more important than anything else.


There is a longer story about GBPUSD today. In order to follow it, some M30 charts need to be squeezed. This analysis of chaos does not allow jumping to H4 or daily charts. As stated before, predictions are made from smaller scales to higher scales which is at odds with standard TA principles.

Once we are ready with some numbers and some price levels are inserted their is time to follow some trajectories. The chart below shows developments of one month's duration, starting from January 25. There occurred a huge trigger up @1.5816 (48pips). It pushed prices up to 1.6254. To make shure that we are still observing the same trajectory from there onwards, I kept noted other crucial levels from that trigger set by chaos, of which 4.669 is outstanding.
4.669 gave 1.6040. You have got the line of 1.6040 drawn there on the chart. It is a pity that it cannot be plotted from January 31 but is also seen farther to the left and goes into a longer history than needed.
Now, concentrate on what happened when GBPUSD was approaching 1.6040.
I counted that about 17 times the market strongly reacted in that area, and sometimes did it in an unbelievable way. You can add up some Hollywood feature film stories of for example ninja warriers battling with Kurosawa's samurais, or spidermen contra supermen, or metromen contra megamind. Whatever. The fact is that naked numbers do not appeal equally well.
The fact is 1.6040 should invigorate market lovers more than anything else in this brief history of GBPUSD.
On the way to 1.6040 GBPUSD showed two UPOs-repellers @ 1.5921 & 1.5946.

The meaning of 1.6254 can be understood better when we refer to an even older history, namely November 5 of 2010. It is clear on a next chart attached below.

The blue triangle marks a selling area from Nov.5, 2010. If you looked farther back into the past you would notice other selling periods near 1.6254.
(to be continued)...
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