FLDs and the Week Ahead

Back from a few days off from Thanksgiving Holidays over here. It was a good relaxing time away from everything.

Last week, we were trying to find some sort of bottom. I mentioned before that I have some signals that I am going to use for going long. I am still flat since none of my signals triggered yet. I will outline here now what is this signal so that you have some idea.

Till now, I have barely scraped the surface on the utility of the Hurst model or did not reveal too much to avoid confusion. I have been thinking that I will do that for past few days and mentioned it in my last update as well. Its called FLD - Future Line of Demarcation and is a Hurst concept. Basically it is price line of daily average price moved forward in time by a certain value - this value is determined by the cycle values - like 20 week, 10week, 5week etc. 5 week which is also the 40 day low for example, would be moved forward by approx 20 days. And will be called the 5 week FLD.

FLDs have a lot of utility - Crossing of an FLD confirms that that particular low has been set. And also gives us a target for the price move. See chart below -



I have added some annotations here - The 10 week FLD is offset by approx 34 days here because the 10 week is running 68.3 days right now. This is the light blue line I have shown on the chart. I just gave this as an example but you can see how it worked. Once crossed on downside, it confirmed the 10 week high and also projected a move 1000 sensex pts lower which we got as well. Its uncanny how often this works very well.

You can see several other examples in the chart. Just look at the light blue line - the 10 week FLD and see how it generated a target for the Oct 4th move up. Many more are there. See if you can spot them. When you combine multiple FLDs, it gives a lot of information on what to expect next in the market.

Each FLD cross generates a price target, this price target can generate another price target and so on. This is my trade setup right now. See chart below.



So first for me, the 5 day FLD or the white line should be crossed to the upside. This will generate a target equal to the move until it crosses the white line. Then the pink line and so on. The bigger the FLD line, bigger targets can be generated. And when there are multiple FLDs like this in this position, the move upward can be explosive. Maybe just like the downmove. I will add more on FLDs in coming days.

For now a move above Friday's highs on Nifty at approx 4770 gives very high probability that the lows might be in. And also projects a likely move above 4850(based on FLDs) and above 4850, I become quite confident that the 80 week low also might be in. I will go long today in small quantities with above prices to guide me on where to add and where to cut - Also will have a strict stop at the recent lows of 4650 area - Breaking below this level means the market has more work downside and also that the 80 week low is NOT in. How prices are acting with the FLDs will show me when to take profits or when to stop out the position.

Hope I made sense. This has not been an easy market to trade with all news noise out there. So hope everyone is still 'intact'. Trade Safe.

EDIT: Few minutes after open - 5 day FLD cross at 15800 SENSEX (4740 NIFTY) - Projects 16100 SENSEX (4840 NIFTY) : All approx figures. Lets see if this works out. 4840-4850 cross will give a target of 5050. One step at a time and I will fine tune these values tomorrow.

Best,
Lee