If there is field relatively unexplored, it is volatility. Because you need to throw away the gaussian curve and look the market in the eyes. Obviously you can what it is doing just now, but do you know where it goes?
Most traders have given up on forecasting, they are merely following the trends. But we are talking human perception and analysis. As many studies have show, human mind decisions can be anticipated with some success and that that should be enough to get an edge.
Let’s start. Here you can see price of gold in € some time ago. Do not worry about multiple lines already displayed. A green arrow indicates there should be some buying opportunity. So?
Let’s go back a little bit and and look at the waves.
Now if you patient engouh, look into Dr Andrew, creator of pitchfork and browse to action-reaction lines. Now the fun begins. Pitchforks and reactions lines by extent capture trend and volatility at the same time. As strange as it seems, volatility can be anticipated. Of course, you know quaterly results date, right? So you expect some move. Acttion-Reaction (AR) lines do anticipate this.
Let’s trace the center line (you need research to be able to find which one is best). Then trace the AR lines.
The space between the lines is volatility in 2-dimensional space: time and price!
According to theory, price should stop on one of the next reactions lines
Fast forward in time!
First line is ignored by market. Then we get tops on reaction lines. Not just one time but twice!
Wonderful!
Trade safely until next time
