I see the view count for this thread keeps rising every so often. So I thought of posting some more Volatility Response Model (VRM) predictions.
A quick overview of the VRM. The VRM is a mathematical expression which relates one candlestick to the next consecutive candlestick. This math stays the same between all historical candlesticks and so it takes one step into the future.
The math calculates the high (H) , low (L) and sentiment level (S) in the next future time period. Above this sentiment level the market is bullish. Below this sentiment level the market is bearish.
The math calculates these H, L and S levels out to eight days and eight weeks. So there are eight H levels, eight L levels and eight S levels. These are labelled in the VRM prediction charts as H1, L1, S1 through to H8, L8, S8. That's 24 levels. To simplify these levels I have found that the only important sentiment levels (S) are the highest, lowest and S1. The rest can be ignored.
The other predictions of the VRM are a daily short term trend channel and a weekly long term trend channel. I use these to gauge the bullishness and bearishness in the short term and the long term. The long term trend channel is shown in green on the VRM predictions and the short term trend channel is shown in blue.
To trade FX, I usually have 2 charts to watch the FX market as it evolves. One weekly and one daily.
On the weekly chart I plot the lowest weekly H level, highest S level, S1 , lowest S level, highest L level. On the VRM prediction charts these are colour coded. I also plot the long term trend channel. These predictions last all week until the market closes Friday night.
Each day on the daily chart I plot the daily lowest H level, highest S level, S1, lowest S level, highest L level. On the VRM prediction charts these are colour coded. I also plot the short term trend channel. These predictions only last until the daily close in New York.
On these charts I also plot a EMA channel consisting of EMA(7) (red) and EMA(4) (blue) to see the FX market interacting with the VRM levels.
I attach a PDF file to this post describing the format of the prediction charts I will load onto T2W.
I plan to post predictions for GBP-USD, EUR-GBP and EUR-USD for Monday, Wednesday and Friday. The day after I will post a commentary on what happened on these days.
Observations, comments and questions are welcome.
G
