### Topological analysis

Posted:

**Tue Aug 19, 2008 1:59 pm**Hi there,

I analyse FX through fractal modelling which I have been using for more than ten years. It is different than Bill Williams commercial software. He either has not found it or does not want to disclose it. The main difference is in the making of fractals. One would expect to be able to determine a fractal structure for the future, not just ex post. To establish future turning points one needs a complete fractal image, not a fragment which belongs to the past.

There is a unique and obvious (to me) mathematical link between the Fibonacci numbers/ratios, the Elliott fractals and the Feigenbaum's universal value (4.669...). I am talking about a link in 2-d space, of course. The theory of chaos is around.

For a couple of months I have tested the interbank volume (or rather ticks as explained by Reuters 3000) on FX for signals of turbulence similar to turbulences found in the physics of fluids and gases. A streamline of quotes can be treated like a flow, though discreet in nature. This dynamic process should not be free from erratic behaviour and may develop local turbulences in the flow. A turbulence is a highly unstable state of the system, and the only way for ithe system to return to stability is through dramatic changes of prices (reversals). It follows that if turbulences occur then contrarian positions should bring a handsome profit. It does not matter what causes a turbulence. Even physisists argue about that. What is important is the fact that the flow of quotes sometimes slows down or accellerates to such an extent that creates a turbulent flow.

My question is whether someone has been studying the interbank volume from this angle. I currently concentrate on just two pairs EURUSD and USDJPY for lack of time and analyse M30 volumes. During a session I spot a few turbulences for each pair. USDJPY is my best indicator for the behaviour of the market immediately after the US data, excellent for forecasting EURUSD.

As for today USDJPY signalled BUY at 9:00 and since no other signal occurred it was valid for today's PPI and home market report. Before 14:30 I went long on USDJPY and short on EURUSD and closed 30 minutes later.

In the attachments you will kindly find all turbulences spotted by me for the given period marked by red arrows. The direction of an arrow is determined not guessed. Each arrow is born at the close of an M30 candle.

You may kindly notice that the market reaction is not always immediate.

I analyse FX through fractal modelling which I have been using for more than ten years. It is different than Bill Williams commercial software. He either has not found it or does not want to disclose it. The main difference is in the making of fractals. One would expect to be able to determine a fractal structure for the future, not just ex post. To establish future turning points one needs a complete fractal image, not a fragment which belongs to the past.

There is a unique and obvious (to me) mathematical link between the Fibonacci numbers/ratios, the Elliott fractals and the Feigenbaum's universal value (4.669...). I am talking about a link in 2-d space, of course. The theory of chaos is around.

For a couple of months I have tested the interbank volume (or rather ticks as explained by Reuters 3000) on FX for signals of turbulence similar to turbulences found in the physics of fluids and gases. A streamline of quotes can be treated like a flow, though discreet in nature. This dynamic process should not be free from erratic behaviour and may develop local turbulences in the flow. A turbulence is a highly unstable state of the system, and the only way for ithe system to return to stability is through dramatic changes of prices (reversals). It follows that if turbulences occur then contrarian positions should bring a handsome profit. It does not matter what causes a turbulence. Even physisists argue about that. What is important is the fact that the flow of quotes sometimes slows down or accellerates to such an extent that creates a turbulent flow.

My question is whether someone has been studying the interbank volume from this angle. I currently concentrate on just two pairs EURUSD and USDJPY for lack of time and analyse M30 volumes. During a session I spot a few turbulences for each pair. USDJPY is my best indicator for the behaviour of the market immediately after the US data, excellent for forecasting EURUSD.

As for today USDJPY signalled BUY at 9:00 and since no other signal occurred it was valid for today's PPI and home market report. Before 14:30 I went long on USDJPY and short on EURUSD and closed 30 minutes later.

In the attachments you will kindly find all turbulences spotted by me for the given period marked by red arrows. The direction of an arrow is determined not guessed. Each arrow is born at the close of an M30 candle.

You may kindly notice that the market reaction is not always immediate.