Click on the chart to enlarge it.
Now let's finish up with the developments that occur late on the 15th and early on the 16th (labeled C, C', and C''). This pattern is occurring at precisely the same time as the Zero Hit setup on the 240 minute chart.
I've called your attention to this event because it shouldn't be surprising to see that the Ocean math on a lower time frame such as this 120 minute chart interprets the rally in such a way as to drive NMC and NMC2 (shown as C & C') to an overbought extreme as demonstrated by both of them exceeding their upper standard deviation thresholds (shown as the black dashed lines).
This is perfectly normal behavior from the Ocean tools, and vividly shows that it's not necessary that all time frames be generating Zero Hits to validate a setup signal.
There is an additional observation with regard to this particular formation. Note the position of the bounded NST (C'' in the bottom sub-graph). It has exceeded its upper overbought threshold (upper red horizontal line), indicating the market is extremely overbought and due
for a pull back.
Note that it was in a similar position at the far left of the chart (red up arrow in bottom sub-graph), which kicked off the entire decline that we've been analyzing!
Additionally, as I noted when discussing the 240 minute chart, it's significant that the NST has exceeded all other NST readings since the down move began, while prices have barely retraced at all. That is, a big up move in NST with very little price advance. This formation, especially if accompanied by a commensurate overbought reading (above +50), helps predict that the imminent reversal in prices is likely to be substantial!
The only issue in a case like this one where there isn't a Zero Hit, is that there isn't a precise entry rule as is taught to Ocean Masters. We've recently discovered that when presented with this type of formation, an acceptable entry trigger is a cross of the NST from above to below the zero line (as shown by the red circle on the NST oscillator at the zero line).
In this case, the close of the bar where NST crossed over the zero line is only a few ticks below where the entry rule from the 240 minute NMC Zero Hit generated a trade, so an additional add-on trade could be initiated from this setup while using the same initial price based stop method taught for NMC Zero Hit entries.
Although not shown on any charts, I would also like to mention that the concept of the zero line crossover of NST may be useful whenever any of the bounded tools generate a divergence. That is, if prices make a new high (or low), while one or more of the Bounded tools fail to make new highs (or lows), it sets up a divergence.
It's fairly easy to spot divergences, but a primary problem with them is deciding when to place the trade. It's been noticed that when using a zero line crossover of the NST (because it reacts to price action so swiftly) you can often get a nice entry price and usually be fairly confident that the market move that set up the divergence is complete.
This technique doesn't completely eliminate the risk of whipsaw, but you may find it quite helpful when trying to trade a divergence formation, especially when the first “push” of NST managed to achieve an overbought or oversold extreme (> + 50, or < - 50).
As you can see from this rather lengthy multiple chart example, Ocean is equally adept at trading Forex as it is with commodities and stocks. Also, the Ocean techniques are as valid on intra-day timeframes as they are on the daily charts, with the added benefit of minimizing the required risk to enact a trade.
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