Forex Analysis & Reviews: 21.12.2011 - EUR/USD: Theory on Numerical...

21.12.2011 08:35 AM

EUR/USD: Theory on Numerical Analysis.

Use time frame of M15 to determine the lower and the higher price of yesterday, because it's more precise.

Tip: Some traders make a mistake.

The Fibonacci retracement is VALID only if the price movements on daily basis, it should be between lower and highest price of that day.

Tuesday's historic (20^thof December 2011).

Open : 1.2997
High :1.3131
Low : 1.2993
Close : 1.3180

Function = (High - (High - Low)) * 38%.

The market will indicate a bullish opportunity on level of: (Low - (Function / 100)) = 1.3065.

Pivot Point (1) = (High + Low + Close) / 3 = 1.3068.

If the price close below the pivot point on the H4 chart the market will indicate a bearish opportunity on level of 1.3025.

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Take Profit Formulas:

Sometimes the market seems that it doesn't follow our forecast, therefore in order to get out spank from the market before losing your profit.

Then you have to calculate the Market Movements.

Market Movements = (High / (High + Low)) * 100

If Market Movements is between 50.20 and 50.40, so it should close your position after 1H:30M (Around 40 pips to 60 pips).
If Market Movements is between 50.40 and 50.60, so it should close your position after 3H:15M (Around 80 pips to 120 pips).
If Market Movements is between 50.60 and 50.99, so it should close your position after 8H:00M (Around 140 pips to 200 pips).

Apply Formulas:

Market Movements = (1.3131 / (1.3131 + 1.2993)) * 100

Market Movements = 50.26

Note:

It should be noted that the relation between the Volatility and the Market Movements lies in:

So, let's say you did not close your position after 3H:15M, so after each 15 minutes the Volatility will be decreased "Volatility - (Volatility * 40 / 100)" if you wait more then the trend can go against you at any moment. Because just after this lap of time the probability that this Volatility decrease every 15 minutes.

Trading Recommendations:

According to previous events, the price has still been trapped between 1.32 and 1.29.

Buy above 1.3065 (Around 50% of Fibonacci retracement levels) with a first target of 1.3140, it might resume to 1.3210.
Below 1.3025 (Around 23.6% of Fibonacci retracement levels) look for further downside with 1.2975 and 1.2870 targets.

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Technical Levels:

R3: 1.3281
R2: 1.3206
R1: 1.3143
PP: 1.3068
S1: 1.3005
S2: 1.2930
S3: 1.2867

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Tools of Chart:

It should be noted that the market was so stable and trend was also so clear (upward).
Range was: 138 pips (upward).
The value of 50% Fibonacci retracement levels is: (High + Low) / 2 = 1.3062. (The key level to confirm a bullish market).
Volatility is 180.30 so the market has called for a high volatile.

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Observation (s):

Please check out the market volatility before investing, because the sight price may have already been reached and scenarios become invalidate.
Use historic prices to determine future prices.
Fibonacci retracement uses to determine accurate psychology level of support and resistance, and playing according to in this kind of period.
Fibonacci in a range trader (it is looks like the trend is trapping and going up or down, if you sell or buy for a long term in this period you'll go sure for losing your profit.

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Warning (s):

Stop Loss should NEVER exceed your maximum exposure amounts.
Usually the market has a high volatile, if the last day had a huge volatility.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Technical analysis