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Q: This is what I'm referring to... on the larger time frames.. something is different ... different formula or something.. but MM's harmonics has the same Major divisions as I got up in TFs.. Ensigns does not... it seems to switch and consider something not related to the 1/8ths of 1000 (in this case for the OEX) , 10000, 100, or any of the other scale rhythms I posted the other day...
I'm not sure how better to demonstrate this... but there is NO correlation to the 2 models out here on the daily and larger...
Big Picture... Daily: www.charts.dacharts.com/2006-07-21/RH_c7.png
Zoomed in... Daily: www.charts.dacharts.com/2006-07-21/RH_c8.png
I hope this helps explain what I was saying the other day... It is consistent with all markets I've looked at.
A: Thanks for the details of the EUR chart, which I have worked with and can explain what I am doing, and explain what I think MM is doing. And this is the root of the difference in our approach or opinion.
The EUR price is 1.2677, so how shall bounding octaves be determined.
My approach is to normalize the price with a decimal shift to arrive at 1267.7 and realize we had a 3 position shift of the decimal. The 1000 base boundary would apply, and the 8th intervals for 1000 would be 125, so we get boundaries of 1000, 1125, 1250, and 1375. These boundaries would be converted back to the price format of the instrument, which in our case is a 3 decimal shift, so we have major boundaries at 1.250 and 1.375, and this can be sub-divided as needed in 8ths or 64ths. So in my Octaves you find a major line drawn on 1.250.
I consider my approach to be correct an universal to any instrument. The price of the instrument at 1.2677 is really arbitrary for decimal placement. The contract size could just as well have been defined so the instrument was traded with a price of 12.677 or 126.77 or 1267.7 etc. In fact, quote systems of two decades ago broadcast all futures quotes an integers. And you will remember the change in stock quotes a few years back to trade in penny increments instead of 12.5 cent increments. So the EUR quoted as 1.2677 is no different for amplitude of its swings than the $INDU trading with a decimal position for a quote of 12677.00. It is all relative and independent of where the decimal point is in the price. A 10% move in either is still a ten percent move.
Now MM, apparently wants to sub-divide the intervals smaller and smaller until a bounding division is found, instead of normalizing the price to 1000. For small numbers this is odd he wants to do this. He basically NORMALIZED big numbers because the example of 100 using an 8th of 12.5, and 1000 using a base of 125, and 10000 using a base of 1250 is actually a decimal shift. He may not have realized that for bigger numbers he is normalizing, and for smaller number he is sub-dividing the range down instead of decimal shifting the price up.
Lets work out the details of finding his bounding range for 1.2677. 100 divided by 64 is 1.56250, and dividing that again by 64 is the interval of 0.02441. Lets list the increments starting from 3/4th of 1.562500 by adding 0.02441 multiple times, we get
1.17188 > 1.19629 > 1.2207 > 1.24512 > 1.26953 > 1.29395 The 2 numbers in bold are the boundaries for the octave shown in your MM example.
To repeat myself, my octaves will be at 1.2500 boundary with interval of 125 div 8, decimal shift of 3 = 0.015625. Next boundary is 1.2500+0.015625
1.2500 > 1.26563
So this illustrates the difference in our determinations. I think my approach is more correct and consistent. I normalize all prices to a standard because decimal placement is truly arbitrary. The 1.2500 boundary on the EUR chart is equivalent to some other instrument with a boundary at 12.500 and some other instrument with a boundary at 125.00 on up through the $INDU with a boundary at 12500.00. I think it is a wrong approach to sub-divide 100 by 8 multiple times until micro boundaries are found for small priced instruments. Now that we both understand how and why MM differs from Ensign, I will continue to stand by my reasoning and logic, and consider it superior to MM's method.
And the proof is in the pudding, so to speak. Look at the beautiful S&R lines on the EUR chart using Ensign's Harmonic Octaves.
Last modified 1/30/08 12:43 AM |
