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FX TECHNICAL ANALYSIS


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Price change in a trend


The change, or movement, of the closing price of an instrument ( h er ei n a f t er “price change”) in a trend has its own laws and rules that extend on all i n s t r ume n t s for all time frames. The o b s e r v a t ion s and


subsequent


c a l c u l a t ion s have determined the


value of the closing


minimum price


change of an instrument (hereinafter “the closing price”) in a trend. The minimum value of the closing price change is a calculated coefficient K, measured in percent. The coefficients K were calculated for the closing prices for the following time frames: 5M, 1H, Day, and Week. Despite the fact that the values of K at the different time frames differ, they are all calculated in the same manner. The longer the time frame, the larger the value of K. Coefficient K can have the sign "+" if the price rises, or the sign "-" if the price falls. The value of K doesn’t depend on the instruments and on the Stock Exchange at which it is


46 FX TRADER MAGAZINE April - June 2019


prices are typically different from the calculated prices on a small value. To solve this problem, the area allowable values of (n*K) was designed. The area allowable value has an upper bound (UB) and a lower bound (LB). These bounds differ from the values (n*K) with the coefficients- k1. The upper bound is greater than (n*K) on the coefficient k1, the lower bound is less than (n*K) on the coefficient k1.


So, if the closing price falls in the allowable value area of (n*K) it means that the closing price has changed


traded. Thus, the closing price, in a trend, changes on some estimated value (n*K), where n is from 0 to 30. The value (n*K), as well as K can have the sign "+" (to increase prices) or the sign "-" (price drop).


In practice, the actual closing


on this value. Knowing this, we can build a template (table 1, page 4), which provides estimated values the closing price change (K; 10*K, -K; -10*K) and the allowable value area for each value. Suppose, the closing price has changed, according to this rule, on the value of (2*K), and the "new"


closing


prices do not change. That is, each subsequent value of the closing prices fall in the allowable value area (2*K). It means that the prices no longer change. This event can be called “Stop of price change (mo v eme nt)”. The stop of price


change


(movement) is an event when P closing price values, following the "new"


closing price, fall in the


allowable value area of (n*K), where P > 1. Tus, the closing price, which satisfies this condition, can be called “the Stopping Price”.


Let's look at an example of how a closing price change occurs at the 1H time frame: t =10, estimated change value is (6*K). Select an initial price of trend. Te initial price of trend is some stopping price.


(Te technique


of the selection of an initial price of trend will be described below). The closing price 1 = initial price* (1 +


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