Playground: probabilistic estimation of depth of the retrace
I think many among you already know about Tom DeMark "TD Sequential" method.
Here i'm applying that in some pretty unorthodox way, because i find it fascinating.
Let's find the longest weekly sequential strips, as the longest one ever came just into spring 2019.
Let's check what happened AFTER their blow, let's see how deep they retraced.
Let's collect some statistical data we can use for some (pretty basic) trend speculation.
Historically we had just 7 TD sequential strips lasting more than 9 weeks, only 4 lasting more than 13.
The longest strip EVER ( 23 weeks ) just ended in July.
So what can we presume now, given the past examples of long strips retrace ?
Considering just basic FIBs (0.5, 0.382, 0.236), history told there was a straight 100% probability to hit at least 8600$ (FIB 0.5 calculated on the whole strip).
Infact all the 7 previous strips retraced AT VERY LEAST to their own FIB 0.5.
Recent price action confirmed this was true also for the latest strip, so let's move on.
Now there's still a 57% probability to have some weekly close under 7350$ (FIB 0.382), but also a 72% chance as well that price WON'T close a week anymore under 5800$ (FIB 0.236).
This is pretty interesting, given price got down to 7700$ already.
Speaking of wicks ( or intra-week lows ) there's still a 85% probability to see some wick under 7350$, 57% for under 5800$ lows.
That's some pretty high chance of a deep failed low, maybe with a swift recovery on weekly close.
However if we consider only the longest strips ( red squares, longer than 13 weeks ), the probability of a dip under 7350$ is just 50%.
25% chance for some sub 5800$ low.
So after all a dip, if that's the case, may be less severe.
If so all the 7 thousands range would be a pretty good accumulation zone.
---
That's what this pretty small set of data data tells.
So dig into past and look for advices, do your own diligence.
Obviously Future != past, but often it makes a rhyme ...
Have a nice weekend.
** THIS AN EDUCATIONAL AND SIMPLIFIED POST, NOT A TRADING ADVICE ***
Here i'm applying that in some pretty unorthodox way, because i find it fascinating.
Let's find the longest weekly sequential strips, as the longest one ever came just into spring 2019.
Let's check what happened AFTER their blow, let's see how deep they retraced.
Let's collect some statistical data we can use for some (pretty basic) trend speculation.
Historically we had just 7 TD sequential strips lasting more than 9 weeks, only 4 lasting more than 13.
The longest strip EVER ( 23 weeks ) just ended in July.
So what can we presume now, given the past examples of long strips retrace ?
Considering just basic FIBs (0.5, 0.382, 0.236), history told there was a straight 100% probability to hit at least 8600$ (FIB 0.5 calculated on the whole strip).
Infact all the 7 previous strips retraced AT VERY LEAST to their own FIB 0.5.
Recent price action confirmed this was true also for the latest strip, so let's move on.
Now there's still a 57% probability to have some weekly close under 7350$ (FIB 0.382), but also a 72% chance as well that price WON'T close a week anymore under 5800$ (FIB 0.236).
This is pretty interesting, given price got down to 7700$ already.
Speaking of wicks ( or intra-week lows ) there's still a 85% probability to see some wick under 7350$, 57% for under 5800$ lows.
That's some pretty high chance of a deep failed low, maybe with a swift recovery on weekly close.
However if we consider only the longest strips ( red squares, longer than 13 weeks ), the probability of a dip under 7350$ is just 50%.
25% chance for some sub 5800$ low.
So after all a dip, if that's the case, may be less severe.
If so all the 7 thousands range would be a pretty good accumulation zone.
---
That's what this pretty small set of data data tells.
So dig into past and look for advices, do your own diligence.
Obviously Future != past, but often it makes a rhyme ...
Have a nice weekend.
** THIS AN EDUCATIONAL AND SIMPLIFIED POST, NOT A TRADING ADVICE ***
Comment:
Please like it if you wish to see more "educational" posts.
Comment:
Related idea here:
"Serious" analysis here:
Keep an eye on SMA100/W ( 7700$ area ) and 2019 low-to-high 0.382 retrace in the 7200$ area.
"Serious" analysis here:
Keep an eye on SMA100/W ( 7700$ area ) and 2019 low-to-high 0.382 retrace in the 7200$ area.
Comment:
50% to 85% probability to see price under 7350$ ...
Ticked ;)
Ticked ;)
Comment:
Now we'll see if 7200$ area can be support.
*IF* bulls react we may get a V shaped correction.
For now let's wait for CME futures expiration on friday.
*IF* bulls react we may get a V shaped correction.
For now let's wait for CME futures expiration on friday.
Comment:
"So after all a dip, if that's the case, may be less severe.
If so all the 7 thousands range would be a pretty good accumulation zone."
"we'll see if 7200$ area can be support.
*IF* bulls react we may get a V shaped correction"
Sounds meaning ful now ;)
Both ticked as well.
If so all the 7 thousands range would be a pretty good accumulation zone."
"we'll see if 7200$ area can be support.
*IF* bulls react we may get a V shaped correction"
Sounds meaning ful now ;)
Both ticked as well.
Comment:
"Now there's still a 57% probability to have some weekly close under 7350$ (FIB 0.382), but also a 72% chance as well that price WON'T close a week anymore under 5800$ (FIB 0.236).
However if we consider only the longest strips ( red squares, longer than 13 weeks ), the probability of a dip under 7350$ is just 50%. 25% chance for some sub 5800$ low".
57% ... ticked as well.
From there downwards probability starts sliding under 50%.
A 25-28% overall probability of sub 5800$ means chance for accumulating to me.
Traveling, will update within the next few days.
However if we consider only the longest strips ( red squares, longer than 13 weeks ), the probability of a dip under 7350$ is just 50%. 25% chance for some sub 5800$ low".
57% ... ticked as well.
From there downwards probability starts sliding under 50%.
A 25-28% overall probability of sub 5800$ means chance for accumulating to me.
Traveling, will update within the next few days.