This is not a stand alone tool, so try combining
this with the Dynamic Fibonacci Channel (DFC) using
the same concepts as before. Please see Chart 6,
which is the same 10-minute Bond chart as before.
The market was rising until Day A when the DFC
Daily top band pushed prices back and flattened out
in the 123-16 area. Note, at this point the Dynamic
Pivot (DP) plus Dynamic Support 1 (DS1) plus Dynamic
Support 2 were still pointing up but note the
direction of the Dynamic Resistance 1 and Dynamic
Resistance 2 were already pointing downwards. Could
this be a warning?
Yes, I know on day E the prices have hit the bottom
bands (the solid line) of the Daily DFC. But here
we can see the difference. First, the DFC bottom
band is still trending down and not yet leveled out.
Second, all of the Dynamic Lines (daily) are still
pointing down, roughly parallel to each other.
Subtle, yes, but also dynamic.
Chart 7 (shown on page 8) shows the S&P 9-
minte/45-minute/Daily. The market was rising until Day B (4/13), the DFC top band turned down gently,
DR1 and DR2 point down, but DS1 and DS2 point
up while the DP is slightly up. Does this look similar
to Day B on Chart 6 (the 10-minute T-bonds)? On 4/
14, Day C of the S&P chart, 4 of the 5 Dynamic Range
lines point down. Also note that the Fixed Pivot was
challenged twice and held. Check out this day on your
program from the open to the close. What do you see
when you track the market bar-by-bar?
On 4/14 there was a slight gap up on the opening
and for the first four 9-minute bars the Dynamic Pivot was exactly on top of the Fixed Pivot. But on the
fifth 9-minute bar the Dynamic Pivot dipped below
the Fixed Pivot. Even though 2 bars rose back
up to the Fixed Pivot line, the Dynamic Pivot
stayed below the Fixed all day. Remember what
I said earlier. The Fixed Pivot is where it should
be by the projection based on yesterday’s range.
But the Dynamic Pivot is where it really is today
following every live tick. It is the difference between
the two that gives us important information.
It is very difficult to change direction intraday unless the geometry between
the Fixed and the Dynamic
Pivot changes.
Also the angular distance between
the Fixed and the Dynamic
lines acts as a beam for price direction.
See how on chart 7, Day E (4/
16) DS2 is already well above the
fixed S2 and pointing upwards.
DS1 is almost level and the other
three are all down. Nevertheless,
please note when a DS2 rises in
this manner, it is often enough to stop the downside trend in its
tracks, as it did this Friday. Does
this mean a reversal is guaranteed?
No, but if you were short from
Day B some profit taking is advisable.
In future issues we will
return to this concept with up to
date charts. Issue 7, detailing the
Ergodic Candlestick Oscillator
will follow shortly.
Go to Beginning >>> The dynamic range
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