July 12 Method

Assumptions

This is a weekly system.

The assumption is: a breakout from the weekly initial balance will project a move to the average weekly range. In short, once we have a breakout from the initial balance, we shall see a directional move.

The system produces losses when instead of a directional move, the pair has directionless price action. We can anticipate the lack of direction by observing where the current weakly bar is trading relative to the month’s range. If it is an inside bar, we anticipate that the week will produce a lack of direction.

It is also important to note the monthly range.

Once the month achieves its 10-bar average true range, the price action is likely to meander. For this reason, once the monthly range has attainded its 10-bar ATR, it’s best to trade another instrument.

Tools

·  10 monthly ATR

·  10 bar weekly ATR

·  Initial Balance

o  daily Monday range PLUS

o  Tuesday range from the Asian open to the close of the 2 PM bar Singapore time (close of 7 AM bar UK time, or close of 2 AM bar EST)

Rules

  1. You are buying the breakout above the initial balance and selling the breakdown below the initial balance.
  2. The breakout price for a buy is five pips plus the spread; buy above the high of the initial balance. The breakdown price for a sell is -5 pips; se; below the low of the initial balance.
  3. The initial stop on the buy is the sell price on the breakdown to the downside; the initial stop on the cell is the buy price on the breakout to the upside.
  4. The target is the weekly ATR calculated from the current week’s extreme. For example, if the ATR is 300 pips, and we have bought an upside breakout, the target is 300 pips from the week’s low.

Filters

·  If the weekly is forming within the current months range, pass the instrument.

·  If the current initial balance is greater than 60% of the weekly ATR, pass the instrument.

Initial balances

·  Forex: Mondays range plus the range to the close of the 14:00 bar (Singapore time).

·  Other instruments: usually Mondays range plus the first hour of trading on Tuesday.

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