Click on the chart to enlarge it.
Here's a 120 minute chart of the EURUSD. We want to focus primarily on the time window surrounding the 14th through the 16th because the higher time frames have offered us ample opportunity to place trades based on numerous Ocean formations.
However, before beginning that discussion, lets look at the point labeled A and A' on the 7th through the 9th of September:
Remember that the 360 and 240 minute charts had both generated NMC, NMC2, and NXC sell setups where additional Ocean tools were validating the significance of the setups as potentially solid signals. Here we see that the 120 minute chart was giving us a series of screaming Zero Hit sell setups as well, as denoted by the labels on NMC (A) and NMC2 (A').
Note that prices were trading below both Ocean moving averages, and that the Fast Ocean moving average (thick green line) was trading below the Regular Ocean moving average (thick magenta line).
Additionally, as the Zero Hits occurred prices had rallied back to the Fast MA upper standard deviation band (the dashed green line), and simultaneously to the Regular Ocean MA. As we've seen before, these are textbook setup qualifiers that generate strong Ocean sell signals when NMC and/or NMC2 offer up a signal.
Now let's turn our attention to the real lessons from this chart as they pertain to the period from the 14th through the 16th:
Note the NMC2 Zero Hit sell setup that developed on the 14th (labeled B in the second sub-graph). This setup occurs in conjunction with and simultaneous to the setups that we've analyzed on the 360 and 240 minute charts.
This triple time frame concurrence is ideal for a trade entry and allows us to enter a trade where the risk is negligible and where the profit opportunity is amplified due to the larger expected magnitude of the higher time frames' impulse signals.
As if we needed any additional information to act on this trade, we find a very important formation being broadcast by the Ocean moving averages:
Note what's going on with prices (noted with large red arrow) at the time of the Zero Hit (point B). We see that prices have traded back to the resistance of the Regular Ocean moving average (thick magenta line), and that prices have hit the upper standard deviation band of the Fast moving average (upper dashed green line).
As noted above, and as we've seen previously, this by itself is a powerful qualifier, but there's something even more unique about this formation - note how incredibly tight the upper and lower bands that surround the Ocean moving averages have become.
It's fairly common to see the Fast MA bands pinch down, but when the Fast MA pinch is accompanied by a Regular MA pinch (dashed magenta lines), and when the entire Fast MA pinch is encompassed within the Regular MA pinch, you can bet that once prices get started moving, they'll move longer and stronger that normal.
(This is the end of Part 5. Go to Part 6.)
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