Discussion of article "Analyzing charts using DeMark Sequential and Murray-Gann levels"

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New article Analyzing charts using DeMark Sequential and Murray-Gann levels has been published:

Thomas DeMark Sequential is good at showing balance changes in the price movement. This is especially evident if we combine its signals with a level indicator, for example, Murray levels. The article is intended mostly for beginners and those who still cannot find their "Grail". I will also display some features of building levels that I have not seen on other forums. So, the article will probably be useful for advanced traders as well... Suggestions and reasonable criticism are welcome...

First of all, candles are powerful support-resistance zones. Second, measuring the distance from the nearest extremum to the candle extremum allows for reliable forecast of local reversal levels. Finally, we are able to measure the candle itself, which also provides significant levels or the distance between the candles... Generally, this is the most creative part of the work allowing us to describe the future price movement for many bars ahead...

The figure demonstrates all three possibilities.

Fig. 12. Different ways of measuring "breakout" candles.
1, 2 - base points for Murray levels,
3 - base points for verticals with levels 7/8 and 14/8,
4 - the top of the breakout candle is a support level

The red dotted line sets the Murray levels. I have placed these levels from the global extremum in this window (1) up to the nearest yellow breakout candle (2). The range is increased 4 times (the level of 2/8 is taken as the base one). The vertical dotted lines indicate the middle and end of the trend line, as well as the final level point.

Vertical solid lines (3) — sample candle length measurement. The length of these verticals is equal to the length of the candle increased four times. The horizontal lines represent 7/8 (solid ones — from 100%, while dotted ones — from the entire length) of the interval. Start points are marked with arrows. Note how the price interacts with the levels indicated by straight lines (red ellipses).

Finally, the bold orange horizontal line on the right (4) shows how the maximum level of the breakout candle becomes the support level for the subsequent movement.

All these patterns are absolutely typical. I have not chosen the chart deliberately. I have simply used the current GBP chart.

Author: Oleh Fedorov