Long-Term Market Direction: Predictable or Not?
I believe that we can accurately gauge a market’s direction on any time frame, and that knowing direction on the higher time frame charts, i.e.: the weekly, and monthly charts, will lend the trader a significant edge in their investing and trading. Yes, in my educated opinion market movement is predictable, especially on its higher time frames. To support that statement I’ve included links to many of my previous posts on Forexfactory.com which dealt with higher time frame trend shifts. It is my believe that the higher the time frame, the more likely it is that a market will hold it’s trend, and I cite a tenet of fractal geometry to support that statement: “what happens on the higher scale is replicated on the lower scales but with a slight degree of complexity”. What that translates to from a trader’s perspective is: the lower down the time scale you go, the less predictable price movement becomes; likewise the higher up the scale you move the less iterations — think directional changes — you are going to have, the more likely a market will hold its current direction.
There is no doubt that there were times when I pointed out directional shifts or potential directional shifts which did not hold, or only held for a short period of time, but more times than not those were on time frames lower than that of the monthly. To remain balanced I’ve included a link to all of my FF posts at the bottom of this article.
The best part about these posts below is the determination used for the directional shift is simple to qualify, and constant, and a testament to the fact based methodology I write about, and which we teach at Trading-U.
The Death of the Carry Trade, Nov 12th 2007, http://www.forexfactory.com/news.php?do=news&id=55717
Double Top in EURUSD, 7-21-08, http://www.forexfactory.com/news.php?do=news&id=97009
Monthly Buy Signal in USDCHF, 7-25-08, http://www.forexfactory.com/news.php?do=news&id=97777
USDCAD Breaking Higher, 9-4-08, http://www.forexfactory.com/news.php?do=news&id=104605
Reversal Bottom in Euro may Be Signaling Start of Short-Covering Rally, 10-23-08, http://www.forexfactory.com/news.php?do=news&id=119089
GBPJPY from Boom to Bust, 11-12-08, http://www.forexfactory.com/news.php?do=news&id=126167
Double Top in Greenback, 3-13-09, http://www.forexfactory.com/news.php?do=news&id=157993
Double Bottom in GBPUSD Projects to 163-1/2, 4-11-09, http://www.forexfactory.com/news.php?do=news&id=163093
EURUSD in Position to Shift Weekly Trend, 10-1-09, http://www.forexfactory.com/news.php?do=news&id=199661
Has the Dollar Already Turned Higher, 10-21-09, http://www.forexfactory.com/news.php?do=news&id=203016
Continued Euro & yen Weakness Going Forward, 1-18-10, http://www.forexfactory.com/news.php?do=news&id=216449
Dollar Index Kickin’ Up Again, 4-17-10, http://www.forexfactory.com/news.php?do=news&id=232150
Monthly Trend Shifts Higher for USDCAD, 7-1-10, http://www.forexfactory.com/news.php?do=news&id=244190
For a history of all Jay’s posts Forexfactory go to: http://www.forexfactory.com/search.php?searchid=10758932
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To attend Jay Norris’ next live webinar, or obtain the archive of afterwards go to: July 8th Webinar
Jay is the author of Mastering the Currency Market, McGraw-Hill, 2009 and a Trading Instructor at Trading-U.com. To see the details of Trading-U’s just released course go to Trading Course
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments
Higher Time-Frames keep ya outta trouble for the best part of the time. The trend is your friend and the higher the timeframe – the closer your friend becomes