Chart above shows the last three trade set ups on what is a short to medium term time frame (hourly bars, so moves are expected to last between 2 to 3 days). The bars below the graph relate to the statistical measure i use to pinpoint areas of possible exhaustion. I've placed arrows on the chart to point to the occasions where the stats gave a buy or a sell signal. As is clear, the market did eventually do what it was supposed to, but not within the time limit allocated to each trade, and hence both the first buy and the sell where cut at a small loss.
The third signal was hit last night on the 9pm close of the futures, and called for a rally or sideways move that was to last a minimum of 6-8 bars. Mkt has not rallied this am, indeed although it showed some promise to begin with, the time limit within which the move should have occurred has now passed, and the potential for this set up is much diminished. Could the same thing as the previous two signals happen, so that the expected move is seen later than the allocated time frame allows? Yes it could, but the balance of probabilities points to a failure of the move, thus at this time one would have to be flat, waiting for another set up.
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